Hershey exceeded Wall Street expectations for first-quarter sales and profit, benefiting from higher prices and steady consumer demand for its chocolates and candy.
Hershey has seen minimal resistance as its customers have been willing to spend on higher priced chocolates and candy.
Packaged food companies such as Mondelēz and Hershey implemented price hikes over the past few quarters to offset costs of commodities, including sugar and cocoa.
Hershey has seen a demand surge during significant holidays such as Easter and Thanksgiving, with consumers stocking up on favourites such as Reese's peanut butter cups and Hershey's Kisses.
The results echo sentiments of rival Mondelēz which saw upbeat first-quarter results, banking on consistent demand for its higher-priced products.
By The Numbers
Hershey's net sales rose 8.9% from a year earlier to $3.25 billion (€3 billion) in the three months ended 31 March, compared with analysts' expectations of $3.11 billion (€2.9 billion), according to LSEG data.
Net sales for confectionery products in the North America market, Hershey's largest and accounted for about 80% of its revenue, rose to $2.70 billion (€2.5 billion) from $2.45 billion (€2.3 billion) a year earlier.
Excluding items, it earned $3.07 per share, above market estimates of $2.76.
The company's organic price rose 5.2% while organic volume increased 3.4%.
The company's gross margin decreased 170 basis points to 44.9% in the reported quarter.
Michele Buck, president and chief executive officer of Hershey's stated, "Our investments in innovation, marketing and in-store execution are driving consumer engagement and improving market share performance across segments. We are successfully operating in our new ERP system, a major milestone towards achieving our previously announced agility and efficiency targets.
"As we continue to navigate recent volatility in the business, we remain committed to strategies that drive long-term growth and sustainable value creation."
News by Reuters, additional reporting by ESM.
