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Hershey Plunges As Sluggish US Candy Sales Weigh Down Earnings

Published on Feb 2 2018 8:30 AM in A-Brands tagged: Trending Posts / Chocolate / Hershey

Hershey Plunges As Sluggish US Candy Sales Weigh Down Earnings

Hershey plunged the most in more than a year after its quarterly sales and profit missed analyst estimates, weighed down by poor performance in the pivotal US market.

Shares fell as much as 6.2% to $103.51 on Thursday in New York, the biggest intraday drop since August 2016.

Hershey’s sales dipped 1.6% in the fourth quarter, hampered by weak demand for chocolate in the US. The company’s forecast for 2018 also disappointed investors, despite an expected boost to the bottom line from the tax reform packaged passed last year.

Hershey’s ill-fated expansion into China also remains an issue. Sales in its international division slid 5.4% in the quarter, with a 30% plunge in the world’s most populous country.

Changing Trends

Hershey, which generates close to 90% of its revenue from selling candy in the US, has been under pressure to diversify its lineup of products as consumers change how they eat and shop.

The company recently agreed to buy Amplify Snack Brands for roughly $921 million, acquiring the maker of SkinnyPop popcorn as it pushes into salty snacks. That came after company bought a beef jerky company in early 2015.


It wasn’t all bad news for chocolate in the fourth quarter. Mondelez International, which makes Cadbury and Milka, said its global sales were up 5%, with strong results in Europe and Brazil. Mondelez has a limited presence in the US chocolate market, but has tried to expand sales there after a failed bid to buy Hershey in 2016.

The strong international sales helped Mondelez beat profit estimates for the quarter, sending its shares higher. The snack giant gained as much as 4% to $46.18 on Thursday, the biggest intraday gain in three months.

News by Bloomberg, edited by ESM. Click subscribe to sign up to ESM: The European Supermarket Magazine. 

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