Pandemic recovery accelerates Hershey’s output.
Pennsylvania’s Hershey The Hershey Co. reported higher-than-expected sales in the most recent quarter thanks to strength in its seasonal and core product lines as well as a faster recovery in its foodservice and specialty retail operations.
Compared to $271.1 million, or $1.33 per share, in the same time last year, net income attributable to the Hershey Co. for the first quarter ended April 4 was $395.8 million, or $1.96 per share on the common stock. Strong volume increases were seen in the North American, International, and Other parts of the findings, which were only slightly offset by higher input costs, increases in advertising, and other charges.
In the previous year, net sales increased by over 13% to $2.3 billion from $2.04 billion.
“We had exceptional first-quarter results, with double-digit sales and earnings growth driven by broad-based growth across the portfolio,” President and CEO Michele G. Buck stated in pre-recorded remarks before a conference call with securities analysts on April 29. “We started the year with ambitious intentions to achieve balanced brand activation through distribution, price, innovation, advertising, and bottom- and top-line growth. In addition to meeting our goals, we are also benefiting from better than expected external circumstances. We have been able to respond to these quickly evolving trends and achieve incremental growth for the year thanks to our plans, capabilities, and agility.
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During the quarter, Hershey’s North America division net sales climbed 13% to $2.08 million, propelled by the take-home chocolate portfolio’s ongoing strength, robust seasonal sales, and a rebound in the foodservice and specialty retail sectors. The recent period’s revenues were negatively impacted by the Krave, Scharffen Berger, and Dagoba brand divestitures.
In light of the impressive first-quarter results, Hershey management increased its forecasts for net sales and earnings-per-share growth for the entire year. The previous range of 2% to 4% was revised to include a full-year net sales growth estimate of 4% to 6%. It is anticipated that full-year reported earnings per share will be between $6.64 and $6.86, up from $6.11 in fiscal 2020 by about 9% to 12%. From fiscal 2020, full-year adjusted profits per share are predicted to rise 8% to 10%, from the previously disclosed range of 6% to 8%.
According to Ms. Buck, “we anticipate that some pre-pandemic behaviors, such as in-person education, dining out, and in-store shopping, will rebound.” “We will concentrate on our confection and healthier snack packs, foodservice operations, single-serve goods, and unconventional channel distribution options when those levels rise. Our sales through these channels improved significantly in the first quarter. Following a high single digit decline in the fourth quarter of 2020, our foodservice and specialty retail business grew in the first quarter of 2021. ..
Crucially, we observed sustained strength in our core portfolio through traditional channels even as these firms recovered. Although we don’t think that trends in at-home and away-from-home channels will remain this high indefinitely, our teams are taking advantage of this rare window of opportunity for dual strength as consumer behaviors shift throughout the COVID recovery.According to Ms. Buck, e-commerce accounted for 15% of confection trips in the first quarter, up almost 60% from the same time last year.
“To motivate customers as they prepared for the season, our team was equipped with robust omni-channel activation and cross-category promotion,” the spokesperson stated.
Hershey’s snack brands experienced growth as well, led by SkinnyPop, which increased its market share in the ready-to-eat popcorn segment. According to Ms. Buck, the Pirate’s Booty brand saw a decrease in the quarter as major advertising efforts were moved to the second quarter and multi-pack sales were still under pressure from virtual school.
In the second quarter, she said, “we expect trends to improve as more students return to in-person schooling and promotional activity increases.”
Reduced consumer mobility continued to negatively impact One Brands’ protein bar business in the first quarter, but over the following few weeks, trends improved and turned positive, according to Ms. Buck. She continued, saying, “We expect category and One trends to continue to improve as the year progresses.”
Hershey plans to raise prices on its non-chocolate and grocery products, which is expected to benefit results in the second half of the year.Shares of Hershey trading on the New York Stock Exchange on April 29 closed at $164.22, up $5.36, or 3.4%, from the previous close of $158.86.