HERSHEY (HSY) Q2 FY26 earnings call: guidance and Q&A

Andrew asked about the disparity between retail scanner consumption and reported shipments in Q2, and why strong organic sales and EPS beats did not yield a larger raise to full-year guidance.

Kirk Tanner explained that measured retail consumption of ~3% understated demand by ~2 points due to unmeasured channels (foodservice) and Easter concentration. Replenishment added 1 point of growth. Steve Voskuil noted that guidance was prudently raised to the upper half because replenishment occurred faster than anticipated in Q2 and management planned reinvestments behind second-half innovation.

“U.S. confection retail consumption of about 3% understated our real demand by about 2 points, primarily due to the nonmeasured channel growth and the year-over-year concentration of Easter shipments in 2026.”

asked by Andrew Lazar · answered by Kirk Tanner

Max inquired whether Q3 merchandising shipments were pulled into Q2 and asked for an update on visibility into 2027 organic sales and EPS targets.

Kirk Tanner confirmed that slightly over 1 point of Q3 merchandising shipments occurred in Q2, which will neutralize against an extra shipping day in Q4. For 2027, the 2% to 4% North America confection algorithm holds, with 2% as the baseline due to a shorter Easter, while Salty Snacks and International will be accretive. Cocoa deflation visibility remains solid for 2027.

“For 2027, given the shorter Easter, we would see 2% is sort of the starting point for that segment in the '27 framework.”

asked by Max Gumport · answered by Kirk Tanner

Robert asked about the root cause of manufacturing and supply chain constraints in Dot's pretzels and whether capital investments are required.

Kirk Tanner clarified that constraints were growing pains from rapid demand growth; investments in automation are already providing relief, with dedicated new capacity coming online in 2027. Steve Voskuil added that segment operating margins suffered from spot freight and elevated logistics, which will modestly linger into H2 before normalizing.

“We saw this coming and we had already increased our investment in automation and capacity with capacity coming online in 2027 and so we feel good about that.”

asked by Robert Moskow · answered by Kirk Tanner

Leah asked for color on cocoa supply visibility, El Niño impacts, and the exact meaning of full-year gross margin expansion being 'slightly below 400 basis points'.

Steve Voskuil stated that current cocoa supplies are diversified and inventories are healthier than during the 2023-2024 deficit cycle, with West African crop data encouraging. Kirk Tanner explained that gross margin expansion is just below 400 bps solely due to salty snack logistics costs, while productivity and underlying commodity benefits remain robust.

“The recent '26 and '27 West African crop data is, I'd say, encouraging after a slow start. So even if some of the origins are impacted by El Nino, we believe the market is already pricing it in.”

asked by Leah Jordan · answered by Steven Voskuil

Peter asked why Q3 is expected to generate the strongest earnings growth of the year and what base factors are being lapped.

Steve Voskuil explained that Q3 of the prior year absorbed peak cocoa costs and the full brunt of tariffs, creating an easier comparative hurdle and a larger net commodity and tariff tailwind in Q3 FY26 than in Q4.

“The biggest factor is you had the highest cocoa cost last year. And I would say the full brunt of tariffs. And so those are the 2 biggest things we'll be lapping in the third quarter this year.”

asked by Peter Galbo · answered by Steven Voskuil

Michael asked about margin compression in the International segment and whether excess capital would be deployed to buybacks in the second half.

Kirk Tanner explained that higher cocoa costs hit international with a delay alongside elevated logistics, while ongoing operational optimization will be a slight second-half drag before expanding margins. On buybacks, no incremental repurchases are budgeted for H2, but the newly approved $500 million authorization provides opportunistic flexibility.

“So as we sit here today, I would say we don't have anything in the back half plan for additional share buybacks, but we're going to remain optimistic and you saw we've got some additional authorization”

asked by Michael Lavery · answered by Kirk Tanner

Peter inquired about the magnitude of SNAP waiver impacts and what is embedded in full-year expectations.

Kirk Tanner noted that SNAP headwinds have been slightly milder than originally budgeted. Early-adopting states saw heavier impacts, whereas recent states such as Texas and Florida exhibited lower spending reductions.

“The Snap waivers versus the outlook. I would say it is really it's slightly better. And so it's what we plan. I thought we did a really good job planning for the impact of Snap”

asked by Peter Grom · answered by Kirk Tanner

Thomas asked whether widened price gaps versus a key competitor are driving share losses or if share shifts are primarily innovation-led.

Kirk Tanner responded that market share movements year-to-date have been predominantly driven by competitors' innovation rather than pricing gaps. Price gaps remain within expected ranges, and Hershey plans to support its own major H2 innovation slate with targeted trade investments.

“Look, year-to-date share dynamics is largely driven by innovation. Our pricing and our price gaps are largely as expected and our elasticities, as we just talked about, are tracking slightly ahead of our expectations year-to-date.”

asked by Thomas Palmer · answered by Kirk Tanner