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    HSY
    Earnings call· Sep 2025(Q3 FY25)

    HERSHEY CO HSY

    Oct 30, 2025 Source

    Executive summary

    The Hershey Company Q3 FY25 — Raises Full-Year Net Sales and Adjusted EPS Outlook

    The Hershey Company delivered strong third-quarter results, exceeding expectations for net sales and organic growth, driven by innovation and strategic investments across its confectionery and salty snacks portfolios. Despite significant gross margin pressure from commodity inflation and tariffs, the company raised its full-year net sales and adjusted EPS outlook, while acknowledging ongoing challenges in cocoa costs and certain international markets. Management remains confident in achieving balanced top- and bottom-line growth in 2026 through continued productivity and strategic investments.

    Highlights

    5

    • Total Hershey net sales increased 6.5% in Q3 FY25, exceeding expectations.

    • Organic constant currency net sales growth was 6.2% in Q3 FY25, driven by strong innovation and execution.

    • U.S. CMG retail sales increased 5.4% in the 12 weeks ending September 28, resulting in a share gain of more than 10 basis points.

    • Salty Snacks retail takeaway increased 14% year-over-year in Q3 FY25, leading to a share gain of nearly 50 basis points.

    • International segment net sales and organic constant currency net sales both increased 12.1% in Q3 FY25.

    Concerns

    5

    • Adjusted gross margin decreased 850 basis points year-over-year in Q3 FY25, primarily due to commodity inflation and tariff expenses.

    • Full-year adjusted EPS is now expected to decline between 36% and 37%, impacted by higher supply chain costs and unfavorable mix.

    • Cocoa prices remain up over 70% from 2023 levels, with inflation still forecasted for 2026.

    • The Halloween season began slower than anticipated, leading to disappointing performance for the period.

    • Economic and regulatory challenges in Mexico are expected to remain a headwind for the International segment through at least the first half of 2026.

    Guidance & targets

    13
    CategoryTargetConfidence
    Full-year 2025 Net Sales Growth
    approximately 3%
    high materiality
    High
    Full-year 2025 Adjusted EPS Decline
    between 36% and 37%
    high materiality
    High
    Full-year 2025 International Segment Constant Currency Net Sales Growth
    low single-digit
    medium materiality
    Medium
    Full-year 2025 Capital Expenditures
    approximately $425 million
    medium materiality
    High
    Full-year 2025 Interest Expense
    approximately $195 million
    low materiality
    High
    Full-year 2025 Adjusted Tax Rate
    approximately 26%
    low materiality
    High
    Full-year 2025 Other Expense
    approximately $30 million to $35 million
    low materiality
    High
    Full-year 2025 Net Price Realization
    between 5 and 6 points
    medium materiality
    High
    Full-year 2025 Tariff Expense
    range of $160 million to $170 million
    medium materiality
    High
    Full-year 2025 Adjusted Gross Margin Decline
    approximately 675 to 700 basis points
    high materiality
    High
    Q4 FY25 Adjusted Gross Margin Decline
    more than in Q3
    high materiality
    High
    FY26 Top- and Bottom-Line Growth
    on-algorithm
    high materiality
    High
    FY26 Technology Investments
    increase investments
    low materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    North America Confectionery
    Net sales increased year-over-year, driven by net price realization from 2024 and 2025 pricing. Volume declined due to price elasticity, partially offset by strong everyday business and innovation-related shipment timing.
    Net price realization: approximately 7%Volume: declined approximately 1%Sour Strips acquisition benefit: 40 bps
    		increased 5.6%5.6%——
    North America Salty Snacks
    Net sales increased, with volume growth across Dot's, SkinnyPop, and Pirate's Booty, and incrementality from new products, offsetting planned private label production reduction. Net price realization was down due to customer programming timing.
    Volume growth: approximately 11%Net price realization: down approximately 1%
    		increased 10%10%——
    International
    Net sales and organic constant currency net sales both increased significantly. Foreign currency translation impact was negligible. Volume growth included an approximate 5-point benefit from shipment timing, expected to reverse in Q4. Strong growth in Brazil and Europe, partially offset by price elasticity and challenges in Mexico.
    Organic constant currency net sales growth: 12.1%Net price realization: approximately 7%Volume increase: around 6%
    		increased 12.1%12.1%——

    Operational metrics

    39
    Total Net Sales Growth
    6.5%YoY
    Q3 FY25

    Ahead of expectations.

    Organic Constant Currency Net Sales Growth
    6.2%YoY
    Q3 FY25

    Ahead of expectations.

    Net Impact of Acquisitions and Divestitures
    30 bps
    Q3 FY25

    Benefit to total net sales growth.

    U.S. CMG Retail Sales Growth
    5.4%YoY
    12 weeks ending Sep 28

    Led by non-seasonal business.

    U.S. CMG Retail Share Gain
    >10 bps
    12 weeks ending Sep 28

    Resulting from strong performance.

    Non-Seasonal CMG Retail Sales Growth
    6.6%YoY
    Q3 FY25

    Increased from 4.7% in the previous quarter.

    Sweets Penetration Increase
    65 bps
    YTD

    Through innovation and brand building.

    Mainstream U.S. CMG Market Share Expansion
    >15 bps
    YTD

    Across the category.

    SkinnyPop Retail Sales Growth
    6%YoY
    YTD

    Revitalized with new packaging, marketing, and price pack architecture.

    Hershey's Chocolate Retail Sales Growth
    4%vs 1% decline in 2024
    YTD

    Returned to growth after a previous decline.

    Reese's Retail Sales Growth
    7%YoY
    Q3 FY25

    Consumption exceeded category growth.

    Hershey's Brand Retail Sales Growth
    11%YoY
    Q3 FY25

    Consumption exceeded category growth.

    Cadbury Retail Sales Growth
    10%YoY
    Q3 FY25

    Consumption exceeded category growth.

    Jolly Rancher Retail Sales Growth
    nearly 30%YoY
    Q3 FY25

    Consumption exceeded category growth.

    Better-for-You Portfolio Growth
    8.5%YoY
    Q3 FY25

    Contributed to overall performance.

    Everyday CMG Retail Sales Growth
    12%YoY
    past 4 weeks

    Double-digit growth across chocolate, sweets, and mints.

    Cocoa Price Increase
    >70%YoY
    from 2023 levels

    Cocoa prices remain significantly elevated.

    Salty Snacks Retail Takeaway Growth
    14%YoY
    Q3 FY25

    All three brands contributed to the increase.

    Salty Snacks Market Share Gain
    nearly 50 bps
    Q3 FY25

    Resulting from strong retail takeaway.

    SkinnyPop Retail Sales Growth
    7%YoY
    Q3 FY25

    One of the five fastest-growing brands among top 20 salty brands.

    Dot's Pretzels Retail Sales Growth
    13%YoY
    Q3 FY25

    One of the five fastest-growing brands among top 20 salty brands.

    Pirate's Booty Retail Sales Growth
    11%YoY
    Q3 FY25

    Reflecting strong back-to-school performance, Pokemon partnership, and multipack expansion.

    Global Reese's Net Sales Growth
    double digitsYoY
    Q3 FY25

    Driven by strong brand equity investments and activation.

    Foreign Currency Translation Impact
    negligible
    Q3 FY25

    The impact of foreign currency translation during the third quarter was negligible.

    International Net Price Realization
    7%
    Q3 FY25

    Reflecting strategic pricing initiatives across key markets.

    Adjusted Gross Margin Decline
    850 bpsYoY
    Q3 FY25

    Gross margin was higher than expected due to timing of cocoa hedges and earlier-than-planned net price realization.

    Incremental Tariff Expenses
    $65 million
    Q3 FY25

    Contributed to adjusted gross margin decline.

    Advertising and Related Consumer Marketing Spend
    decreased 5%YoY
    Q3 FY25

    Spend decreased from prior year.

    Adjusted Operating Expenses (ex-A&M) Increase
    5%YoY
    Q3 FY25

    Increase in operating expenses excluding advertising and marketing.

    AAA Program Net Savings
    $150 million
    FY25

    On track to deliver incremental net savings this year across COGS and SG&A.

    Interest Expense
    $51 million
    Q3 FY25

    In line with expectations.

    Adjusted Tax Rate
    26.7%up from 15.2% last year
    Q3 FY25

    Increased from prior year.

    Capital Expenditures (including software)
    $86 million$42 million lower than the prior year period
    Q3 FY25

    Lower than prior year due to lapping previous capacity investments.

    Dividends Paid
    $271 million
    Q3 FY25

    Dividends paid to shareholders.

    Share Repurchase Authorization Remaining
    $470 million
    as of Q3 FY25

    No shares repurchased in Q3 against the December 2023 authorization.

    Global Cocoa Grind (Demand)
    down 13%YoY
    Q3 FY25

    The 10th straight quarter of mid-single-digit or greater declines, indicating reduced demand.

    North America Confectionery Net Sales Growth
    5.6%YoY
    Q3 FY25

    Segment net sales growth with price and volume decomposition.

    North America Salty Snacks Net Sales Growth
    10%YoY
    Q3 FY25

    Segment net sales growth with volume and price decomposition.

    International Net Sales Growth
    12.1%YoY
    Q3 FY25

    Segment net sales growth with price and volume decomposition, noting shipment timing impact.

    Industry KPIs

    7
    MetricValueDetails
    Gross margin31.8%%
    Brand platform growthReese's: 7%, Hershey: 11%, Cadbury: 10%, Jolly Rancher: nearly 30%%
    Organic net revenue growth6.2%%
    Retailer trade negotiation statusin progress
    Volume mix vs pricing decomposition6.2%%
    Elasticity consumer response commentaryimpact of price elasticity
    Category growth benchmark channel shift dataresilience and expandability

    Deals & partnerships

    1
    Sour StripsAcquisition of confectionery brand.

    The Sour Strips acquisition contributed a 30 basis point benefit to net sales in Q3.

    Risks & headwinds

    5
    Cocoa Price Inflationongoing

    up over 70% from 2023 levels

    Mitigation: Committed to managing cost inflation through all levers and continuously driving productivity; robust hedging program in place.

    Slower Halloween Season PerformanceQ3 FY25

    disappointing

    Mitigation: Analyzing trends to adjust product lineup and marketing strategies for future seasons; added additional investments for Halloween and holiday seasons.

    Mexico Economic and Regulatory Headwindsthrough at least the first half of 2026

    impacting overall category growth

    Mitigation: Gained share in Mexico chocolate and executing plans to reinvigorate the spicy candy portfolio.

    Higher Supply Chain Costs, Unfavorable Mix, Strategic Brand InvestmentsFY25

    offsetting strong top-line results

    Mitigation: Focused on actions to drive long-term success and confident in delivering on-algorithm top- and bottom-line growth in 2026.

    Tariff ExpensesFY25

    $65 million (Q3 FY25), $160 million to $170 million (FY25 guidance)

    Mitigation: Modeling lower Canadian retaliatory tariffs, partly offset by fluctuations in other country-specific rates.

    What to watch in Q4 FY25

    5

    International Segment Constant Currency Growth

    next quarter
    Currentlow single-digit (FY25 outlook)
    Targetdeceleration in Q4

    Why it matters

    Indicates impact of price elasticity, Mexico softness, and shipment timing on international performance.

    Our 2025 outlook for the segment remains low single-digit constant currency growth. This implies a deceleration in Q4, which reflects the impact of higher price elasticity, category softness in Mexico and the aforementioned timing of📎 shipments.

    2 min read5 chapters

    Detailed Narrative

    01

    CEO Transition and Strategic Vision

    Kirk Tanner, in his first earnings call as CEO, expressed confidence in Hershey's people, iconic brands, and execution. He outlined a vision to become a multi-category snacking leader, supported by strong capabilities in supply chain, retail sales, R&D, and innovation. Tanner plans to share a detailed strategic plan at the 2026 Investor Day to further advance Hershey's leadership in the snacking industry.

    02

    Strong Q3 Performance and Innovation

    The company reported robust Q3 results, with total net sales increasing 6.5% and organic constant currency net sales growing 6.2%, surpassing expectations. This performance was fueled by successful innovation, including Reese's Oreo, which was the top new item in the confection category for Q3 and overindexed with Gen Z and millennial buyers. Other top innovations included Jolly Rancher Ropes, Freeze Dried candies, and Shaq-a-licious Gummies.

    03

    North America Confectionery and Salty Snacks Momentum

    U.S. CMG retail sales grew 5.4% in the 12 weeks ending September 28, leading to a market share gain of over 10 basis points, with strong performance in the non-seasonal business. The Salty Snacks segment saw retail takeaway increase 14% year-over-year in Q3, gaining nearly 50 basis points of share, driven by SkinnyPop, Dot's, and Pirate's Booty. The company plans a refresh for Pirate's Booty in 2026, leveraging the successful SkinnyPop playbook.

    04

    Gross Margin Pressures and Cocoa Outlook

    Adjusted gross margin declined 850 basis points year-over-year in Q3, primarily due to persistent commodity inflation, with cocoa prices remaining over 70% higher than 2023 levels, and incremental tariff expenses of approximately $65 million. Despite some retreat in cocoa futures, the company still forecasts cocoa inflation for 2026 due to its hedging program. Full-year adjusted gross margin is expected to decline 675-700 basis points.

    05

    Halloween Season and International Challenges

    The Halloween season started slower than anticipated, impacting performance, attributed to factors like warmer weather and purchase concentration closer to the holiday. While the company expects seasonal traditions to remain important, it will adjust future strategies. The International segment experienced strong double-digit growth in Brazil and Europe but continues to face economic and regulatory headwinds🌐 in Mexico, which are expected to persist through the first half of 2026.

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