Dive Brief:
- Hershey reported a 3.7% increase in revenue to $1.64 billion in the second quarter, its first sales increase in a year.
- Quarterly profit soared to $146 million, or 68 cents a share, compared to a loss of $99.9 million, or 47 cents a share, in the same quarter last year.
- Hershey also lowered its sales expectations for the year due to weak growth in confections in North America and continued macroeconomic struggles in China.
Dive Insight:
Excluding currency impact, Hershey's quarterly sales rose 4.5%, with a 4% increase in organic sales thanks to higher volumes.
The company continues to struggle in its candy, mint and gum segment, though gum was a fast-falling category overall as of earlier this year, according to Nielsen data. At the same time, Hershey is looking ahead to launches of new products like protein bars under the Krave jerky brand or its Reese's Pieces Peanut Butter Cups. The latter is a hybrid innovation that won Hershey the "best in show" award for most innovative new product at the Sweets & Snacks Expo.
Hershey also continues to pursue brand acquisitions and internal product development, particularly in the realm of protein — a stark contrast to its predominantly chocolate and confections portfolio. The company announced its purchase of barkTHINS premium chocolate brand in April and its regional launch of SoFit brand protein-based products in January. Indulgence continues to be a focus, but this diversification to include more better-for-you snacks could be a key to sustaining company growth.
Hershey continues to be a speculated target for Mondelez, and Hershey's return to revenue growth this past quarter is welcomed news to Mondelez if it still plans to enter another offer. In its own earnings report this week, Mondelez reported a 17.7% decline in revenue, due in part to the loss of income from its divested coffee business.