On Friday, Hershey Co said that Americans are snacking more. Of course, what they are really saying is that Americans are, apparently, buying more chocolate—as the company has experienced a boost in sales to reach its full-year profit guidance.
Indeed, the company reported better-than-expected profits even amid mixed signals about consumer confidence expressed earlier in the earnings season. Also, more competition from rivals—particularly targeting health-conscious consumers—has put pressure on sales. Still, it looks like Hershey is holding strong.
Chief Executive J.P. Bilbrey said, “I think we can see that there’s firming in the category. We think people are, across all income cohorts, beginning to spend a little more confidently than they have before.”
Apparently the company is doing so well that they managed reject a takeover approach of Mondelez International Inc, from earlier this year. Mondelez had made an offer over the summer but the Hershey executive board asked for more money. Then in August Mondelez made it known it would its chase, leaving Hershey instead to pursue overseas expansion—and domestic [healthy] snack expansion—on its own terms. You may know Mondelez better as the company who makes Oreo cookies.
Now, Brilbey will step down in July, and Michele Buck—who was promoted to Chief Operating Officer last summer—is, perhaps, the most likely CEO candidate. Of course, she is currently helming efforts to increase the company’s presence in the health-focused snacks field (particularly at the checkout line).
Buck even says, “There has been a bit more competition [from healthy items].”
Of course, Hershey also makes popular Reese’s Peanut Butter Cups and Jolly Ranchers candy, reporting in addition a 46 percent increase in the third-quarter with sales up 2.2 percent, to reach $2 billion in the third quarter. Now the company expects to reach its full-year earnings per share—which has been adjusted to exclude specific items—to register between $4.28 and $4.32 per share. This is four cents higher than its previuos earnings estimate and, more importantly, tops analyst expectations.
And with that, shares in Hershey Co rose 6.3 percent, to $101.50 in early afternoon activity.
You may be aware that Hershey had recently bought Krave beef jerky and created the SoFit line of protein bars and squeeze pouches, and they have even developed their own snack mixes (chocolate, pretzels, nuts) as part of its attempt to reach a more health-conscious consumer.