HSY — The Hershey Company

Hershey Company Q3 2025 Earnings Call Summary

1. Key Financial Results and Metrics

• Overall Performance: Hershey reported strong growth in its everyday business, with double-digit growth observed over the past four weeks.
• Halloween Sales: The Halloween season started slow, with expectations of a soft performance overall, particularly as Halloween falls on a Friday, which typically sees a last-minute sales surge.
• Cocoa Costs: Cocoa prices remain 70% higher than in 2023, but there is optimism for moderation in costs moving into 2026.

2. Strategic Updates and Business Highlights

• Innovation Focus: The launch of REESE'S Oreo has been a significant driver of growth. Hershey is committed to balancing innovation with core brand growth, emphasizing the importance of both.
• Salty Snacks Performance: The salty snacks segment saw a 14% year-over-year increase in consumption, with brands like Dot's and SkinnyPop contributing to share gains.
• Convenience Channel: The convenience store channel is performing well, with a focus on enhancing merchandising strategies and partnerships with retailers.

3. Forward Guidance and Outlook

• 2026 Expectations: Hershey anticipates a non-algorithmic year for both revenue and EPS growth, aiming for long-term success through balanced growth and margin recovery. The company expects to maintain a revenue growth rate of 2% to 4% and is cautiously optimistic about EPS growth potential.
• Elasticity Considerations: Planning for elasticity is critical, with a conservative estimate of -1% for next year, though current trends show better performance.

4. Bad News, Challenges, or Points of Concern

• Halloween Sales Disappointment: The Halloween season is expected to underperform, raising concerns about consumer engagement and spending.
• Consumer Health: There are indications of a challenging consumer market, with weakening sentiment affecting spending behavior, though the confectionery category remains resilient.
• International Business Losses: The international segment reported losses, attributed to cocoa-driven challenges and pricing dynamics, though share growth is noted in key markets like Brazil.

5. Notable Q&A Insights

• Pricing Strategy: Hershey is not currently focused on further price increases despite cocoa costs potentially moderating. The company aims to maintain a balanced approach to pricing and brand investment.
• Competitive Landscape: The competitive pricing environment remains rational, with no significant concerns about price gaps across the portfolio.
• SNAP Program Impact: The potential impact of changes to the SNAP program is expected to be minimal on the business, as only 2% of SNAP dollars are in the CMG category.
• Tax Rate Changes: The tax rate has been affected by various factors, including adjustments in reserves and procurement strategies, with further guidance expected in future calls.

This summary encapsulates Hershey's current financial standing, strategic initiatives, and the challenges it faces as it navigates the market landscape heading into 2026.