Pandemic recovery spurs Hershey results | 2021-04-30 – Food Business News

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HERSHEY, PA. — Strength in core and seasonal products and an accelerated recovery of foodservice and specialty retail businesses contributed to stronger-than-anticipated sales in the recent quarter for The Hershey Co.

Net income attributable to the Hershey Co. for the first quarter ended April 4 was $395.8 million, equal to $1.96 per share on the common stock, up from $271.1 million, or $1.33 per share, in the prior-year period. The results reflected strong volume gains in North America and International and Other segments, partially offset by higher input costs and increases in advertising and other expenses.

Net sales advanced nearly 13% to $2.3 billion from $2.04 billion the year before.

“Our first-quarter results were outstanding, with broad-based growth across the portfolio leading to double-digit sales and earnings growth,” said Michele G. Buck, president and chief executive officer, in pre-recorded remarks prior to a conference call with securities analysts on April 29. “We entered the year with strong plans to deliver accelerated top- and bottom-line growth with balanced activation of our brands through advertising, innovation, distribution and pricing. We are delivering against these plans, and at the same time, external conditions have been more favorable than we anticipated. Our strategies, capabilities and agility have enabled us to respond to these rapidly changing trends and capture incremental growth for the year.”

Hershey’s North America segment net sales increased 13% to $2.08 million in the quarter, driven by continued momentum in the take-home chocolate portfolio, a strong seasonal performance and a recovery in the foodservice and specialty retail business. Divestitures of Krave, Scharffen Berger and Dagoba brands had a negative impact on sales in the recent period.

Hershey management raised its guidance for full-year net sales and earnings-per-share growth based on the strong first-quarter performance. Full-year net sales growth is now expected to be in the range of 4% to 6%, up from the previous range of 2% to 4%. Full-year reported earnings per share is expected to be in the range of $6.64 to $6.86, an increase of approximately 9% to 12% from $6.11 in fiscal 2020. Full-year adjusted earnings per share is expected to increase 8% to 10% from fiscal 2020, up from the previously communicated range of 6% to 8%.

“We expect certain pre-pandemic behaviors to rebound, including in-person schooling, restaurant dining and in-store shopping,” Ms. Buck said. “As those levels rebound, we will focus on our confection and better-for-you snack packs, foodservice business, single-serve products and non-traditional channel distribution opportunities. We saw a significant improvement in our sales in these channels in the first quarter. Our foodservice and specialty retail business grew high single digits in the first quarter of 2021 after declining high single digits in the fourth quarter of 2020. …

“Importantly, while these businesses rebounded, we saw continued strength in our core portfolio in traditional channels. While we don’t expect trends to permanently stay this elevated in both at-home and away-from-home channels, our teams are capitalizing on this unique window of dual strength as consumer behaviors change during the COVID recovery.”

E-commerce represented approximately 15% of confection trips in the first quarter, an increase of approximately 60% versus the same period last year, Ms. Buck said.

“Our team was prepared with strong omni-channel activation and cross-category promotion to inspire consumers as they got ready for the season,” she said.

Hershey also saw growth in its snack brands, driven by SkinnyPop, which gained share in the ready-to-eat popcorn category. The Pirate’s Booty brand declined in the quarter, as multi-pack sales remained pressured by virtual school and key promotional activity was shifted to the second quarter, Ms. Buck said.

“We expect trends to improve as more students return to in-person schooling and promotional activity increases in the second quarter,” she added.

The One Brands protein bar business continued to be negatively affected by reduced consumer mobility in the first quarter, but trends subsequently improved and have turned positive over the past several weeks, Ms. Buck said, adding, “We expect category and One trends to continue to improve as the year progresses.”

Hershey plans to raise prices on its non-chocolate and grocery products, which is expected to benefit results in the second half of the year.

Shares of Hershey trading on the New York Stock Exchange on April 29 closed at $164.22, up $5.36, or 3.4%, from the previous close of $158.86.

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