Hershey's Q2 Sales Surge 26% Amid Profit Pressures

Hershey Company (HSY) released its second-quarter financial report for 2025, highlighting both strong sales growth and significant profit pressures. The company's North American candy and savory snacks business drove a 26% year-over-year increase in net sales. This growth was bolstered by a notable increase in market share for U.S. candy, mint, and gum retail, which rose by approximately 90 basis points. Innovative products such as "Pokémon Kisses" chocolate and "Reese's Oreo Cups" effectively enhanced consumer repurchase rates.

Hershey's strategic pricing and improved production efficiency are expected to boost the company's adjusted gross margin by over 500 basis points by 2026. Internationally, the company maintained growth momentum, with Brazil achieving double-digit net sales growth in fixed currency terms and Europe recording mid-single-digit growth.

However, the report also revealed challenges. Rising commodity costs and increased tax rates led to a 4.7% year-over-year decline in adjusted earnings per share. Currency fluctuations and sluggish growth in the Mexican market resulted in international business net sales growth falling short of expectations. The company anticipates a 36% to 38% decline in full-year adjusted earnings per share due to high cocoa costs and tariffs. The adjusted gross margin for the second quarter contracted by 510 basis points, primarily due to commodity inflation and new tariff expenses.

Looking ahead, the volatility in cocoa prices and tariff policies will continue to pose challenges, making the second half of 2025 a period of sustained profitability pressure. Despite these hurdles, Hershey's strategic initiatives and focus on innovation position the company to navigate these difficulties and maintain its market leadership. The company's commitment to cost management and operational efficiency will be crucial in mitigating the impact of rising costs and competitive pressures, ensuring sustained growth in the future.