Higher prices dampened demand and Hershey (HSY.US) cut its full-year sales outlook.

Thursday, August 1st, before the bell, The Hershey Company (HSY.US) reported its 2024 first quarter earnings. The earnings report showed that The Hershey Company reported $2.07 billion in revenue, a 16.9% decrease from the same period last year, far below the consensus estimate of $2.31 billion. The company also lowered its annual profit and sales expectations, signaling that consumers are being cautious with their spending on candy and chocolate.

The company reported earnings per share of $1.27, below the consensus estimate of $1.43.

The Hershey Company is one of the few companies that have been able to expand their market share while raising prices to offset the impact of rising costs. However, as consumers in all income groups become more price-sensitive and seek cheaper alternatives, the demand trend is changing.

The Hershey Company's largest market is North America, which accounts for about 80% of its annual revenue. Net sales of candy products in the region fell from $1.99 billion a year ago to $1.58 billion.

The gross margin for the second quarter of 2024 was 40.2%, compared to 45.5% in the second quarter of 2023, as the impact of derivative mark-to-market losses, rising commodity costs, and fixed cost leverage offset price realization, productivity gains, and the timing of input cost advantages, resulting in a 53 basis point decline.

Guidance

The Hershey Company expects adjusted earnings per share to be between $9.49 and $9.59 for the full year, compared to the consensus estimate of $9.57. The company expects full year sales to grow 2%, down from the previous estimate of 2-3% growth.