Given the more challenging macro backdrop since the initial outlook, how is the guidance holding up, particularly regarding SNAP and elasticity assumptions for the remainder of the year?

Consumer behavior remained steady, and the macro environment is tracking within expectations. SNAP's impact was mild in Q1, aligning with estimates, and the company plans for increasing headwinds. Elasticities are running favorably, better than modeled, and the same conservative level is embedded for the balance of the year. “But overall, the macro environment is tracking within our expectations of the year. When we talk about SNAP specifically, we realistically modeled the possible effects right from the beginning.”

Can you clarify the implied negative organic sales for confectionery in Q2 and the gross margin phasing for the rest of the year?

Confectionery organic sales are expected to be slightly down in Q2 due to timing issues, including earlier Easter sell-through and international pull-forward. Gross margins are expected to increase by nearly 300 basis points in Q2, with further acceleration in the back half of the year. “Yes, it is expected to be slightly down in Q2 due to that timing that we just talked about.”

What are the key drivers for maintaining top-line momentum in the back half of the year as pricing impacts annualize, and what is the confidence level in sustaining this momentum?

Confidence in H2 is driven by a strong seasons plan, including the Hershey movie and Americana contributing almost 1 point of growth, positive spring reset outcomes, and significant innovation in accessible premium. The company feels good about controllable factors and execution. “Yes, we have confidence in H2, driven by a few things. One, we see a really strong seasons plan for the second half. Our tentpole will deliver a full point of growth Americana, the Hershey movie, we've got a lot built into that, a lot of support from our customers.”

HSY

HERSHEY (HSY) Q1 FY26 earnings call: guidance and Q&A

Earnings call· Mar 2026 (Q1 FY26)· Consumer Staples· Apr 30, 2026

Source: earnings call transcript

Executive summary

The Hershey Company Q1 FY26 — Strong Start with Unchanged Full-Year Outlook

The Hershey Company delivered a strong Q1 FY26, exceeding expectations on several key metrics, driven by robust core brand performance and traction in newer segments like salty snacks and functional snacking. Despite increased competition and some volume declines in confectionery and international segments due to elasticity and timing, the company maintains its full-year outlook, confident in its H2 plans for innovation, seasonal activations, and strategic investments. Management noted the macro environment is tracking within expectations, with GLP-1 and SNAP impacts remaining mild.

Highlights

Net sales increased 10.6% in Q1 FY26.
Organic constant currency net sales increased 7.9% in Q1 FY26.
Hershey's nonseasonal retail sales lifted 11% and Reese's nonseasonal retail sales lifted 10% in Q1 FY26.
North America Salty Snacks retail sales, excluding LesserEvil, grew nearly 10% in Q1 FY26.
LesserEvil retail sales grew more than 65% in Q1 FY26.

Concerns

Gross margin decreased 80 basis points in Q1 FY26 due to commodity inflation and tariff costs.
North America confectionery volume declined approximately 4% in Q1 FY26 due to price elasticity, reduced Easter shipments, and one fewer shipping day.
International segment volume declined approximately 2% in Q1 FY26 reflecting elasticity impact.
Lower year-over-year CMG market share in North America confectionery due to increased marketplace competition.
Planned reduction in private label production and a voluntary temporary product withdrawal impacted North America Salty Snacks volume in Q1 FY26.

Guidance & targets

Category	Target	Timeline	Confidence
Full year organic net sales growth	2.5% to 3.5% high materiality	FY26 · 2026	High
Full year adjusted EPS growth	30% to 35% high materiality	FY26 · 2026	High
Full year gross margin outlook	improvement of approximately 400 basis points high materiality	FY26 · 2026	High
Full year advertising and related consumer marketing spend	increase double digits medium materiality	FY26 · 2026	High
Full year AAA initiative savings	$100 million medium materiality	FY26 · 2026	High
Full year tax rate	approximately 25% to 27% low materiality	FY26 · 2026	High
Full year other expenses	$15 million to $20 million low materiality	FY26 · 2026	High
Full year interest expense	$200 million to $210 million low materiality	FY26 · 2026	High
Full year capital expenditures	$425 million to $475 million medium materiality	FY26 · 2026	High
Q2 adjusted EPS growth	at least 15% medium materiality	Q2 · 2026	High
H1 organic net sales growth	3% to 4% medium materiality	H1 FY26 · 2026	High
Americana and Hershey movie contribution to company sales	almost 1 percentage point medium materiality	FY26 · 2026	High
Q2 gross margins increase	nearly 300 basis points high materiality	Q2 · 2026	High
H2 gross margins increase	something great basis points medium materiality	H2 FY26 · 2026	Medium

Segment performance

Segment	Revenue	YoY	QoQ	Margin
North America Confectionery Net sales increased 8.3%. Volume declined approximately 4% due to price elasticity, reduced Easter shipments from a shorter season, and one fewer shipping day, partially offset by earlier shipments of summer activations planned for Q2. Net price realization was approximately 12%, slightly below expectations due to seasonal mix. The segment experienced lower year-over-year CMG market share due to increased marketplace competition. Net price realization: ~12%Volume decline: ~4%	—	8.3%	—	—
North America Salty Snacks Net sales increased 26%. The LesserEvil acquisition contributed 20 percentage points. Organic constant currency volume growth was approximately 5%, driven by performance across Dot's, Reese's Filled Pretzel, and Skinny Pop, partially offset by planned reduction in private label production and a voluntary temporary product withdrawal. Net price realization was neutral. Management expects operating income to grow double-digits going forward after Q1 discrete headwinds. LesserEvil acquisition benefit: 20 percentage pointsOrganic constant currency volume growth: ~5%Net price realization: neutralRetail sales excluding LesserEvil growth: ~10%Share gain: ~25 basis pointsDot's Pretzels retail sales increase: 13%Reese's Filled Pretzels contribution to pretzel category share: 130 basis pointsDot's snack mix market share: 200 basis pointsLesserEvil retail sales growth: >65%	—	26%	—	—
International Net sales increased 16.1%, with foreign currency translation providing an approximate 7-point tailwind. Net price realization was around 12%. Volume declined approximately 2% due to elasticity impact, partially offset by stronger-than-planned performance in Brazil and earlier shipment timing. Inventory stocking in the Middle East and Asia Pacific contributed approximately 5 points of volume growth in Q1, which is expected to reverse in Q2. Anchor markets maintained or grew market share. Foreign currency translation tailwind: ~7 pointsNet price realization: ~12%Volume decline: ~2%Inventory stocking contribution to volume growth: ~5 points (expected to reverse in Q2)Organic net sales growth (ex-shipment timing) in anchor markets: mid-single-digit	—	16.1%	—	—

Product announcements

Product	Type	Timeline
Elevated Hershey bar	launch	H2 FY26
New protein and 0 sugar offerings	launch	H2 FY26
Multi-textured Reese's pieces item	launch	H2 FY26
New forms and flavors across sweets, refreshment and salty	launch	H2 FY26
Snack mix behind the Dots brand	launch	recently launched
Reese's Oreo	launch	H2 FY26

Risks & headwinds

Lower year-over-year CMG market share due to increased marketplace competition Q1 FY26

Lower year-over-year CMG market share

Mitigation:H2 innovation and merchandising plans, positive position post-spring resets

Unfavorable winter weather Q1 FY26

Unfavorable winter weather

Consumer macro pressure Q1 FY26 and ongoing

Consumer macro pressure

Mitigation:Monitoring closely, adjusting plans to meet consumer needs

SNAP program changes Q1 FY26 and full year

Mild impact on categories in Q1, headwind to increase over the course of the year

Mitigation:Realistically modeled possible effects, will adjust plans to meet consumer needs with portfolio pack types

Elevated geopolitical uncertainty related to the Middle East Ongoing

Elevated geopolitical uncertainty

Mitigation:Inventory stocking in Middle East and Asia Pacific to mitigate near-term global shipping disruptions

Higher gas prices Q1 FY26 and ongoing

Minimal effects in Q1

Mitigation:Monitoring closely, C-store channel remains robust due to increased frequency of consumer visits

Accelerated health and wellness trends and increasing GLP-1 adoption Ongoing

Accelerated health and wellness trends and increasing GLP-1 adoption

Mitigation:Confection category relatively insulated as it's a treat, not a meal; consumers enjoy smaller portions; outlook contemplates adoption rates

Planned reduction in private label production Q1 FY26 and ongoing

Planned reduction

Mitigation:Focus on driving meaningful volume and growth with branded products

Voluntary temporary product withdrawal Q1 FY26

Immaterial in total

Mitigation:Discrete issue, done; operating income expected to grow

Delayed opening of DC Q1 FY26

Additional logistics costs incurred

Mitigation:Discrete issue, done; operating income expected to grow

Commodity inflation and tariff costs Q1 FY26

More than offset positive net price realization

Mitigation:Expected meaningful recovery in gross margin to begin in Q2, hedging program in place

What to watch in Q2 FY26

CMG market share recovery

2Q or H2 FY26

Current Lower year-over-year

Target Return to share growth

Why it matters

Indicates the effectiveness of H2 innovation and merchandising plans in a competitive environment.

And would you, I guess, anticipate that Hersey returns to share growth either in 2Q or as we move through the year?

Find out whether HSY delivers this. Inve re-checks your case every morning.

Q&A highlights

Can you elaborate on the lower year-over-year CMG market share in North America confectionery due to increased competition, and whether Hershey expects to return to share growth in 2Q or later in the year?

Management stated that competition remains rational with no change in pricing, but there's increased competitive innovation and merchandising. They feel good about their position post-spring resets and have plans for innovation in H2, expecting momentum to return to share growth.

“I'd start with competition continues to be highly rational. There's no change in the pricing environment. I just want to start with that. We have seen increased competitive innovation and merchandising from both mainstream and premium competitors.”

asked by Andrew Lazar · answered by Kirk Tanner

2 min read 6 chapters

Detailed narrative

Marketplace Competition and Share Dynamics

The North America confectionery segment experienced lower year-over-year market share due to increased competitive innovation and merchandising from both mainstream and premium competitors. Management noted the pricing environment remains rational. Despite this, the company feels confident about its position post-spring resets and expects momentum in the second half of the year, driven by planned innovation and merchandising efforts to regain share.

Macro Environment and Consumer Resilience

Consumer behavior remained steady in Q1 FY26, with shoppers making thoughtful choices. The impact of GLP-1 trends remained consistent and mild, as waivers were limited to five states. Higher gas prices had minimal effects in Q1, but the company is closely monitoring these factors. Overall, the macro environment is tracking within the company's initial expectations for the year, providing confidence in the full-year outlook.

Snacks Segment Performance and Strategy

The North America Salty Snacks segment demonstrated strong momentum, with retail sales (excluding LesserEvil) growing nearly 10%. This growth was primarily driven by core brands like Dots, Skinny Pop, and LesserEvil. The segment's overall performance was partially offset by a planned reduction in private label production and a voluntary temporary product withdrawal, which incurred additional logistics costs in Q1.

Management expects operating income for the segment to grow double-digits going forward.

Innovation and Product Pipeline

Hershey is focused on innovation across premium, sweets, and better-for-you categories. A new 'elevated Hershey experience' product is slated for launch in the second half of the year, targeting the accessible premium space. Other innovations include Reese's Oreo for the take-home aisle, new protein and zero-sugar offerings, and a multi-textured Reese's Pieces item.

The company also recently launched a snack mix under the Dots brand, which has shown strong early traction.

Seasonal and Cultural Activations

The company has strong seasonal plans for the second half of the year, including Halloween and holiday, and is expanding assortments and introducing new value-priced options. Cultural tentpoles, such as America's 250th anniversary celebration and the upcoming Hershey movie, are expected to contribute almost 1 percentage point to company sales in 2026.

These activations involve special packaging, increased retail presence, and category merchandising, leveraging the full portfolio.

International Expansion of Reese's

Reese's continues to drive growth in the U.K. and other European countries, with the company leveraging imports and local manufacturing. The long-term plan is to scale Reese's internationally, particularly in the U.K. and Europe, with a view to in-source manufacturing once sufficient scale is achieved.

The successful playbook from the U.K. and Europe is now being applied to other markets, including Brazil and Mexico, where Reese's is also gaining traction.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.