Hershey gains after strong demand, higher pricing leads to earnings topper

Oct. 28, 2021 7:09 AM ETThe Hershey Company (HSY)By: Clark Schultz, SA News Editor

Citing Rising Cost Of Ingredients, Hershey"s Raises Prices 8 Percent

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  • Hershey Company (NYSE:HSY) tops estimates as it points to robust consumer demand compared to both the pandemic and pre-pandemic periods.
  • Organic sales were up 4.4% during the quarter. Price realization was a 3.1-point benefit driven by gains in both the North America and International & Other segments. Volume drove an incremental 1.3-point benefit as at-home consumption remained strong and away-from-home consumption improved.
  • Adjusted gross margin was 44.3% vs. 45.4% last year. Industry-wide supply chain challenges, against a backdrop of sustained demand, resulted in higher logistics, labor and packaging costs. Hershey (HSY) also points to unfavorable mix as contributing to lower margins. Those headwinds were partially offset by pricing, the timing of seasonal markdown reserves and productivity initiatives.
  • Looking ahead, Hershey (HSY) sees full-year sales growth landing in the range of +8% to +9% vs. +6% to +8% prior view and +8.3% consensus. Capital expenditures of approximately $500M to $525M are anticipated vs. a prior view of $550M. The reduced capex outlook is due largely to project timing.
  • Shares of Hershey (HSY) are up 1.95% after the earnings topper.

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