Hershey Q2 Earnings Call Highlights
Hershey (NYSE:HSY) narrowed its 2026 sales and adjusted earnings outlook to the upper half of its previous ranges after reporting stronger first-half results, supported by pricing, productivity initiatives and continued consumer demand across its confectionery, salty snacks and international businesses.
President and CEO Kirk Tanner said the company entered the year targeting 4% to 5% net sales growth alongside a “meaningful margin and earnings recovery.” Through the first half, reported net sales rose nearly 9%, organic net sales increased almost 6%, and adjusted earnings per share rose 28%.
For the second quarter, Hershey reported net sales growth of 6.6% from the prior-year period. The LesserEvil acquisition contributed 2.7 percentage points of growth, while foreign currency translation added 30 basis points. Net price realization was approximately 12%, offset in part by an approximately eight-point decline in volume, which the company attributed primarily to elasticity effects in North America Confectionery and International.
Updated outlook points to stronger full-year earnings growth
Senior Vice President and CFO Steve Voskuil said adjusted EPS increased 57% year over year to $1.90 in the second quarter. The result was helped by net sales and gross profit performance, as well as the timing of non-working media investments that shifted into the second half.
Hershey now expects total-company organic net sales growth of 3% to 3.5% for 2026. It also expects adjusted EPS growth of 32.5% to 35%, representing the upper half of its prior outlook. Voskuil said third-quarter EPS growth is expected to be the strongest of the year as pricing, net of commodity costs, is anticipated to be most favorable compared with the year-earlier period.
Adjusted gross margin expanded 350 basis points in the second quarter, driven by pricing, productivity and input-cost deflation. Gross margin performance was also aided by a $9 million tariff refund, which more than offset higher freight and logistics costs in Salty Snacks and International. The company now expects full-year gross margin expansion to come in slightly below 400 basis points because of the higher freight and logistics costs affecting its salty-snacking business.
The company said its outlook does not include potential future tariff rebates. Hershey maintained its full-year interest expense outlook of $200 million to $210 million and said there was no change to its tax outlook.
Confectionery demand remains resilient despite selective spending
Tanner said U.S. shoppers remain value-oriented and selective as consumer sentiment stays soft, though demand in Hershey’s categories has remained resilient. U.S. retail category growth was approximately 5% for confectionery, 17% for permissible salty snacks and 12% for nutrition bars during the first half, according to the company.
North America Confectionery sales increased 4.2% in the second quarter and 6% in the first half. Second-quarter price realization was approximately 14%, modestly ahead of expectations because of product mix, while volume declined approximately 10%. Hershey said the volume decline reflected elasticity, shipment timing and retailer inventory replenishment following several quarters in which inventories had remained below optimal levels.
Marketplace demand in North America Confectionery, including non-measured channels and Easter shipments, rose about 5% during the first half. Retailer inventory replenishment contributed roughly one percentage point to segment growth.
Tanner said Hershey plans to increase brand investment by 30% year over year and increase new innovation items by 30% versus the first half. Planned launches and programs include Hershey’s Creme Filled Bars, Reese’s Pieces with Cookie, Halloween initiatives and the Hershey movie. The company also plans campaigns for Cadbury, PAYDAY and FULFIL.
Salty snacks supply constraints temper outlook
North America Salty Snacks generated 22.9% sales growth in the second quarter, largely reflecting an approximately 22-point contribution from the LesserEvil acquisition. On an organic basis, constant-currency volume grew about 4%, while price realization declined 3% as Hershey increased trade investment behind new item launches.
Retail consumption excluding LesserEvil rose 6.5%, led by Dot’s, Reese’s Filled Pretzels and variety multipacks. However, Tanner and Voskuil said supply constraints affecting multipacks and Dot’s Pretzels weighed on second-quarter performance. The company also cited a planned reduction in private-label production.
Hershey has deployed capital toward automation and capacity and is strengthening customer programming to improve execution. It now expects North America Salty Snacks organic net sales growth of 3% to 4% for the full year.
The company said advertising and related consumer marketing declined about 3% in the second quarter because of efficiencies and the timing of North America Confectionery media spending. In contrast, Salty Snacks marketing rose at a double-digit rate as Hershey expanded national campaigns for SkinnyPop and Pirate’s Booty, while International marketing also increased double digits.
International outlook improves
International net sales increased 5.7% in the second quarter and 11% in the first half. Foreign currency contributed about four percentage points of second-quarter growth. Organic first-half growth was nearly 6%, led by Brazil and the United Kingdom.
Second-quarter International price realization was around 10%, while volume declined approximately 8%. Hershey attributed the volume decline to elasticity and the depletion of roughly $10 million in inventory shifted during the first quarter to mitigate geopolitical risk. Stronger-than-expected performance in Brazil and the U.K. partly offset those factors.
While optimization programs are expected to pressure second-half International performance, Hershey now expects modest full-year organic sales growth for the segment, improving from its earlier expectation for a low-single-digit decline.
During the quarter, Hershey repurchased $370 million of common shares and paid $286 million in dividends. Its board approved an additional $500 million share repurchase authorization in June, and $270 million remained under the company’s December 2023 authorization at quarter-end.
About Hershey (NYSE:HSY)
The Hershey Company (NYSE: HSY) is a leading North American chocolatier and snack manufacturer headquartered in Hershey, Pennsylvania. The company develops, produces and markets a wide range of confectionery and snack products for retail, foodservice and international customers. Hershey's business spans manufacturing, branded product marketing, packaging and distribution across grocery, convenience, mass merchant and e-commerce channels.
Hershey's product portfolio centers on chocolate and sugar confectionery, including core brands such as Hershey's, Reese's, Hershey's Kisses and Twizzlers, alongside non-chocolate snacks and confectionery brands.
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