Hershey, a leading chocolate manufacturer, lowered its annual revenue and profit forecasts after missing Wall Street’s third-quarter expectations on Thursday, November 7. The repeated price hikes have reduced demand for its chocolates, confectionery, and salty snacks.
Hershey maintains high prices amid rising Cocoa costs
According to ET Retail, chocolatiers like Hershey have increased prices to keep profits up despite rising cocoa costs, causing consumer pushback. Also, changing trends, like a shift to non-chocolate treats among younger generations, have hurt Hershey’s chocolate sales.
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Meanwhile, shares of Jolly Rancher-owner Hershey fell about 2.5% in premarket trading. Recently, Kraft Heinz also lowered its annual forecast, even though it beat third-quarter profit expectations, as consumers switched to cheaper, private-label brands. To address rising cocoa prices and improve profit margins, Hershey plans to save $300 million by 2026 through cost-cutting and price hikes.
Hershey expects net sales to be flat, down from 2% before
“While year-to-date results have been affected by historically high cocoa prices and a challenging consumer environment, we are laser-focused on controlling what we can,” CEO of Hershey, Michele Buck said.
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One of the world’s largest chocolate makers, Hershey, now expects its full-year net sales growth to be flat, down from a previous estimate of about 2%. The company also predicts annual adjusted earnings per share will drop by mid-single digits, instead of the slight decline it had previously expected.
Furthermore, in Q3, organic prices increased by 2%, while organic volume dropped by 3%. Total net sales decreased by 1.4% to $3 billion, falling short of analysts’ estimate of $3.08 billion, according to LSEG. Excluding certain items, the company earned $2.34 per share, below the expected $2.56.
