Hershey's Posts Lower Quarterly Profit, Gross Margins; Shares Slip
Chocolate maker Hershey Co. reported a fall in quarterly profit on Thursday as investments in packaging and higher freight costs added to expenses, sending its shares down 5%.
Gross margin - a measure of how much profit a company can make on every dollar spent - fell 490 basis points to 41.5%.
In July of this year, company topped Wall Street's estimates for quarterly sales and profit. Its net income attributable to the company rose to $226.9 million, or $1.08 per share, in the second quarter ended 1 July.
US chocolate makers have been facing slowing growth as consumers opt for healthy foods over sugary candies and processed food, forcing traditional confectionary makers like Hershey to innovate to prop up sales.
Net income attributable to Hershey fell to $263.71 million (€231.6 million) in the third quarter ended 30 September from $273.30 million (€240 million) a year earlier.
Excluding items, the company earned $1.55 per share, in line with analysts' average estimate, according to Refinitv data.
Sales rose 2.3% to $2.08 billion (€1.8 billion) but fell short of the average analyst estimate of $2.09 billion (€1.8 billion).
Sales in North America, its biggest market, rose 2.9% to $1.84 billion (€1.6 billion), while sales in international markets fell 1.9% to $236.1 million (€207.5 million).
Hershey's shares have fallen 5% this year, compared with a 4.2% loss for the broader S&P Consumer Staples index.