4 Highlights From Hershey’s 1st-Quarter 2019

HERSHEY, Pa. — The Hershey Co. totaled about $2 billion in net sales during this year’s fiscal first quarter, a 2.3% increase compared to last year’s first quarter, company executives said during Hershey's first-quarter earnings call April 25.

The company also expects net sales to increase 1% to 3% by the end of the year, said Patricia Little, chief financial officer of Hershey, during the call.

• Here’s how Hershey performed in last year’s fourth quarter.

“Our key initiatives for this year are progressing well, and we remain confident that our balanced plans will enable us to accelerate our U.S. candy, mint and gum (CMG) performance, deliver our acquisition models for amplifying Pirate Brands and maintain our international business momentum,” said Michele Buck, CEO of Hershey, during the call.

Here are four insights from Hershey’s first-quarter 2019 …

Hershey’s year-to-date CMG retail sales dropped 6% through April 14, while the industrywide category fell 5.4%, according to IRI. While these numbers reflect a down period, Hershey remains confident that its retail sales will improve in the coming weeks due to increased traffic from Easter.

“We expect our retail sales and share performance to improve in the coming weeks as the full Easter season is reported,” Buck said. “As is typically the case with a late Easter, we do anticipate some softness in May retail sales as consumers enjoy their Easter candy and make slightly fewer everyday purchases.”

Hershey’s Reese’s and Cadbury chocolates are its top Easter products, having totaled a combined market share of more than 25% during the quarter—greater than the next six brands combined, Buck said.

"We had one of the top-selling new items of the season with our Cadbury Shimmer egg innovation, which contributed even stronger growth and consumer engagement this year,” she said.

Hershey has also revamped its packaging, which includes new stand-up pouches that will debut this spring. The company expects these to have high profit margins and boost sales because they look more appealing on shelves.

“This transformation not only increases branding and competitiveness but also enables us to secure incremental shelf space in store,” Buck said. “Early results are encouraging, and we will remain focused on this transition in the coming months.”

Hershey revealed two new chocolate products this quarter: Reese’s Thins, a thinner version of the classic Peanut Butter Cup, and Kit Kat Duos Mint + Dark Chocolate, which will hit stores in December.

“Our Reese's Thins innovation is off to a solid start and is generating strong consumer engagement,” Buck said. “Current distribution is building, and we expect sales to continue to accelerate in the coming weeks.”

The new Kit Kat Duos will be the first permanent Kit Kat flavor launch in the United States in nearly a decade, Buck said. This product will feature a mash-up of two flavors, with mint cream on top and dark chocolate on the bottom surrounding the light and crispy wafer.

Hershey has explored more marketing campaigns for its products over the past few months, such as targeted media promotions and content production, said Buck. She said these campaigns have enabled Hershey to support its brands in a more cost-effective manner.

“We're leveraging new media capabilities and models to support our portfolio in more efficient ways,” she said. “In the first quarter of 2019, 12 of our U.S. confection brands that represent approximately 90% of our sales had media support.”