Dive Brief:
- Hershey reported lower-than-anticipated U.S. sales for the third quarter due to candy, mint, and gum retail sales that missed expectations. Last quarter's sales were flat.
- Earnings for the quarter fell 31%, falling to $154.8 million from $223.7 million in the same period last year. This was due to sluggish sales as well as increasing costs for ingredients such as dairy and cocoa.
- Hershey also lowered its outlook for the year, now expecting sales to rise 1.5% to 2%, excluding the effects of the stronger dollar, as compared to the previous estimate of 3% to 4% growth. This is the fifth time Hershey has cut its sales forecast.
Dive Insight:
"Hershey attributed the fall in sales to some retailers cutting down on marketing and fewer shoppers visiting stores. A shift in consumer preference from candies and other sugary snacks to healthier foods has forced retailers to limit their marketing efforts on such products," Reuters reported.
The company also "blamed international macroeconomic challenges and the softness in demand for snacks" for its sales decline, according to The Wall Street Journal.
Hershey is shifting focus to the premium chocolate market. This includes its new product, Hershey’s Kisses Deluxe, which the company is releasing in the U.S. just in time for the holidays.
The company is also looking to convenience stores to drive sales, where the company already has a strong presence. "Hershey leverages consumer insights and data in planning effective floor displays and product mixes to help convenience stores increase sales velocity," Food Business News reported.
Shares for Hershey fell 2.5% to $92.01 in pre-market trading.