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    HSY
    Earnings call· Mar 2026(Q1 FY26)

    HERSHEY Q1 FY26 earnings call HSY

    Apr 30, 2026 Source

    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

    5

    • 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

    5

    • 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

    14
    CategoryTargetConfidence
    Full year organic net sales growth
    2.5% to 3.5%
    high materiality
    High
    Full year adjusted EPS growth
    30% to 35%
    high materiality
    High
    Full year gross margin outlook
    improvement of approximately 400 basis points
    high materiality
    High
    Full year advertising and related consumer marketing spend
    increase double digits
    medium materiality
    High
    Full year AAA initiative savings
    $100 million
    medium materiality
    High
    Full year tax rate
    approximately 25% to 27%
    low materiality
    High
    Full year other expenses
    $15 million to $20 million
    low materiality
    High
    Full year interest expense
    $200 million to $210 million
    low materiality
    High
    Full year capital expenditures
    $425 million to $475 million
    medium materiality
    High
    Q2 adjusted EPS growth
    at least 15%
    medium materiality
    High
    H1 organic net sales growth
    3% to 4%
    medium materiality
    High
    Americana and Hershey movie contribution to company sales
    almost 1 percentage point
    medium materiality
    High
    Q2 gross margins increase
    nearly 300 basis points
    high materiality
    High
    H2 gross margins increase
    something great basis points
    medium materiality
    Medium

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    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%——

    Operational metrics

    22
    Net sales growth
    10.6%YoY
    Q1 FY26

    Company-wide reported net sales growth.

    Organic constant currency net sales growth
    7.9%YoY
    Q1 FY26

    Company-wide organic constant currency net sales growth.

    Net price realization
    10%
    Q1 FY26

    Company-wide net price realization.

    Volume growth
    -2%
    Q1 FY26

    Company-wide volume decline, better than expected.

    LesserEvil acquisition benefit to net sales
    2 points
    Q1 FY26

    Benefit to company-wide net sales growth.

    FX tailwind to net sales
    70 basis points
    Q1 FY26

    Company-wide foreign currency translation tailwind.

    Advertising and related consumer marketing investments growth
    6%
    Q1 FY26

    Temporarily lower than planned due to timing.

    Operating expenses growth
    2.2%
    Q1 FY26

    Reflecting capability and technology investments, partially offset by lower compensation, consulting fees, and transformation program savings.

    AAA initiative savings
    $26 million
    Q1 FY26

    Progress towards the $100 million full-year target.

    Adjusted tax rate
    25%60 basis points increase YoY
    Q1 FY26

    Driven by foreign rate differentials and increased state taxes.

    Interest expense
    $50 million
    Q1 FY26

    Q1 interest expense.

    Capital expenditures
    $115 million$31 million lower than prior year
    Q1 FY26

    Includes software.

    Dividend paid
    $288 million
    Q1 FY26

    Paid to shareholders in Q1.

    Common shares repurchased
    $69 million
    Q1 FY26

    Offset dilution from equity compensation grants in 2025 and 2026.

    Valentine's Day seasonal share gain
    ~25 basis points
    Q1 FY26

    Hershey gained share during Valentine's Day.

    Protein Bar portfolio consumption growth
    17%
    Q1 FY26

    Ahead of the category, driven by targeted marketing and club channel momentum.

    Ice Breakers retail sales growth
    8%
    Q1 FY26

    Retail sales increase for the third largest confection brand.

    Jolly Rancher takeaway growth
    5%
    Q1 FY26

    Outpacing the sweets category.

    March Madness display activity increase
    10% to 15%
    Q1 FY26

    Increase in display activity due to tentpole merchandising.

    March Madness net sales increase
    double-digit increase
    Q1 FY26

    Net sales increase from tentpole merchandising.

    International inventory stocking impact on volume growth
    5 points
    Q1 FY26

    Driven by actions to mitigate near-term global shipping disruptions, expected to reverse in Q2.

    Cocoa market outlook
    —
    Long term

    Management remains cautious on long-term cocoa prices but sees potential for a near-term surplus.

    Industry KPIs

    7
    MetricValueDetails
    Gross margin-80 basis pointsbps
    Brand platform growthHershey's nonseasonal retail sales +11%, Reese's nonseasonal retail sales +10%%
    Organic net revenue growth7.9%%
    Adjusted EPS operating income12.4%%
    Volume mix vs pricing decompositionVolume declined ~2 points, Net price realization ~10%
    Elasticity consumer response commentaryFavorable versus planned levels
    Category growth benchmark channel shift dataValentine's Day category sales +3.5%%

    Product announcements

    6
    ProductTypeDetails
    Elevated Hershey barlaunch
    New protein and 0 sugar offeringslaunch
    Multi-textured Reese's pieces itemlaunch
    New forms and flavors across sweets, refreshment and saltylaunch
    Snack mix behind the Dots brandlaunch
    Reese's Oreolaunch

    Risks & headwinds

    11
    Lower year-over-year CMG market share due to increased marketplace competitionQ1 FY26

    Lower year-over-year CMG market share

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

    Unfavorable winter weatherQ1 FY26

    Unfavorable winter weather

    Consumer macro pressureQ1 FY26 and ongoing

    Consumer macro pressure

    Mitigation: Monitoring closely, adjusting plans to meet consumer needs

    SNAP program changesQ1 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 EastOngoing

    Elevated geopolitical uncertainty

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

    Higher gas pricesQ1 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 adoptionOngoing

    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 productionQ1 FY26 and ongoing

    Planned reduction

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

    Voluntary temporary product withdrawalQ1 FY26

    Immaterial in total

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

    Delayed opening of DCQ1 FY26

    Additional logistics costs incurred

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

    Commodity inflation and tariff costsQ1 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

    5

    CMG market share recovery

    2Q or H2 FY26
    CurrentLower year-over-year
    TargetReturn 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?

    Q&A highlights

    6

    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 read6 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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⏳.

    04

    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.

    05

    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.

    06

    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.

    AI-generated summary of the company’s earnings call. Not investment advice.