Hershey’s on Thursday reported a 17% drop in second-quarter sales and sharply cut its full-year profit and sales outlook.
Shares plunged 4.5% early Thursday morning but have since risen 5%.
The Pennsylvania-based candy company, which has a market capitalization of $38.83 billion, like many in the food and snack industry, has been struggling as consumers curb spending amid high inflation.
Hershey’s, which owns brands such as Reese’s and KitKat, has been a rare breed, able to maintain and even grow its market share during the economic downturn.
But demand appears to be declining.
“Today’s business environment remains volatile as consumers pull back on discretionary spending,” Chief Executive Officer Michelle Buck said in a statement.
Second Quarter Net Sales Revenues fell to $2.07 billion, below analyst expectations of $2.31 billion, LSEG data showed.
Net sales in North America, Hershey’s largest market and accounting for 80 percent of regular revenue, fell to $1.58 billion from $1.99 billion in the same period last year.
Adjusted earnings per share were $1.27, down 36.8% from the same period last year and below analyst expectations of $1.43.
Organic sales volume plummeted 18% and gross profit margins fell to 40.2% from 45.5% last year.
The candy company lowered its full-year sales and profit outlook.
Hershey said it now expects sales growth of 2 percent, compared with its previous outlook of 2 percent to 3 percent.
The company had previously expected adjusted earnings per share to be unchanged but now expects a slight decrease.
“Our business is impacted by these trends,” Buck said, referring to cautious consumer spending, “but we are pleased to see continued growth in the confectionery category and increasing momentum for our Salty Snacks portfolio.”
Hershey’s salty snacks collection includes brands such as Dot’s Homestyle Pretzels, Pirate’s Booty and SkinnyPop.
While Hershey’s North American salty snacks division isn’t its largest, it did see growth in the second quarter.
Salty snacks net sales were $289.9 million, up 6.4% from a year ago, which the company attributed to increased volume.
Salty snacks segment revenue was $52.2 million, up 19.2% from the same period last year.
Meanwhile, sales in the confectionery division in North America fell 20.7% compared to the same period last year.
Revenue from the division was $464.5 million, down 29.3% from the same period last year.
