Hershey's Q1 2025: Unpacking Contradictions in Tariff Strategies, Pricing Elasticity, and Chocolate Growth
Earnings DecryptTuesday, May 6, 2025 7:34 pm ET
2min read
Tariff management and mitigation strategies, elasticity of pricing, chocolate category growth and market share, tariff impact and mitigation strategy, and cocoa tariff impact and mitigation strategy are the key contradictions discussed in The Company's latest 2025Q1 earnings call
Tariff Impact and Mitigation Strategies:
- Hershey anticipates an unmitigated tariff impact of up to $100 million per quarter for Q3 and Q4, with two-thirds attributed to Cocoa tariffs and Canadian retaliatory tariffs.
- The company plans to mitigate these impacts through various levers, including lobbying, influencing government action, and leveraging tools like productivity, pricing, and sourcing changes.
Revenue and EPS Trends:
- Hershey expects EPS to decline less than 1% in Q2, following a 30% decline in Q1, driven by Easter season timing and ERP reversals.
- For the first half, EPS is expected to be down about 30%, with a full-year guide implying a back-half decline of 40%.
Consumption Behavior and Market Share:
- Hershey's CMG category experienced a positive year-to-date market share, with anticipation of neutral to positive share in the second half, driven by strong performance in sweets and seasonals.
- The company attributes this to incremental merchandising, robust innovation, and signs of improved consumer sentiment in car travel.
International Expansion and Market Performance:
- Hershey's international business grew organically, with strong performance in Brazil and share gains in India and Mexico, driven by Reese's investments and distribution wins.
- This growth was supported by a normalization in the competitive landscape, allowing Hershey to capitalize on market opportunities.
Tariff Impact and Mitigation Strategies:
- Hershey anticipates an unmitigated tariff impact of up to $100 million per quarter for Q3 and Q4, with two-thirds attributed to Cocoa tariffs and Canadian retaliatory tariffs.
- The company plans to mitigate these impacts through various levers, including lobbying, influencing government action, and leveraging tools like productivity, pricing, and sourcing changes.
Revenue and EPS Trends:
- Hershey expects EPS to decline less than 1% in Q2, following a 30% decline in Q1, driven by Easter season timing and ERP reversals.
- For the first half, EPS is expected to be down about 30%, with a full-year guide implying a back-half decline of 40%.
Consumption Behavior and Market Share:
- Hershey's CMG category experienced a positive year-to-date market share, with anticipation of neutral to positive share in the second half, driven by strong performance in sweets and seasonals.
- The company attributes this to incremental merchandising, robust innovation, and signs of improved consumer sentiment in car travel.
International Expansion and Market Performance:
- Hershey's international business grew organically, with strong performance in Brazil and share gains in India and Mexico, driven by Reese's investments and distribution wins.
- This growth was supported by a normalization in the competitive landscape, allowing Hershey to capitalize on market opportunities.
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