Tariffs Take A Bite Out Of Hershey's Outlook

The Hershey Company (NYSE:HSY) shares surged Wednesday after the confectionery giant reported second-quarter earnings and sales that exceeded expectations, driven by volume gains and strategic execution across its U.S. confectionery and salty snacking businesses.

The company reported second-quarter adjusted earnings per share of $1.21, beating the analyst consensus estimate of 98 cents. Quarterly sales of $2.61 billion (+26% year over year) surpassed the Street view of $2.52 billion.

“Investments in our brands and impactful innovation, coupled with effective execution, are driving solid sales and share gains across both our U.S. confection and salty snacking business,” said Michele Buck, The Hershey Company President and CEO.

Also Read: Hershey Could Get Q3 Sugar Rush Thanks To A Cocoa Crash

Volume increased by about 21 points, largely due to factors such as inventory normalization in North America Confectionery and International segments following the ERP rollout in the second quarter of 2024. The shift in the Easter calendar and earlier Halloween shipments compared to last year also contributed.

Hershey’s North America Confectionery segment net sales were $2.09 billion in the quarter under review, an increase of 32%. The company’s international segment increased 4.4% versus the same period last year to $213.7 million.

Adjusted gross margin was 38.1% in the second quarter, a decrease of 510 basis points year over year, as higher commodity and manufacturing costs more than offset higher volume, net price realization, supply chain productivity and transformation program net savings.

The company reported adjusted operating profit of $410.6 million, up 7.1% year over year driven by higher sales. The adjusted operating profit margin of 15.7% declined 280 basis points.

The company exited the quarter with cash and equivalents worth $912.35 million. The company’s long-term debt as of quarter-end totaled $5.18 billion, higher than $3.19 billion as of December 31, 2024.

The company announced quarterly dividends of $1.370 on the common Stock and $1.245 on the Class B Common Stock. The dividends are payable on September 15, 2025.

Outlook

Hershey has reaffirmed its full-year 2025 revenue guidance of at least $11.43 billion, slightly below the consensus estimate of $11.44 billion.

Hershey now expects adjusted earnings per share to decline between 36% and 38%, compared to its prior guidance of a mid-30% range decline.

The company anticipates full-year tariff expenses of around $170 to $180 million and capital expenditures between $425 million and $450 million.

It also expects savings from its Agility & Automation Initiative to reach approximately $150 million, up from the earlier estimate of $125 million.

Price Action: HSY shares are trading higher by 4.02% to $193.71 at last check Wednesday.

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