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    HSY
    Earnings call· Dec 2025(Q4 FY25)

    HERSHEY Q4 FY25 earnings call HSY

    Feb 5, 2026 Source

    Executive summary

    Hershey Q4 FY25 — Strong Sales Growth and Margin Recovery Outlook

    Hershey concluded FY25 with robust Q4 sales growth, driven by strong performance in North America Confectionery and Salty Snacks, despite significant cocoa inflation and macroeconomic volatility. The company is entering 2026 with a clear strategy focused on accelerating sustainable sales growth, restoring margins, and increasing investments in innovation and brand building. Management anticipates substantial gross margin recovery and continued top-line momentum, positioning for long-term value creation.

    Highlights

    5

    • Total Hershey net sales increased 7% in Q4 FY25, contributing to 4.4% net sales growth for the full year.

    • U.S. Salty Snacking retail sales growth accelerated to 15.6% in Q4 FY25, with SkinnyPop up 8% and Dot's Pretzels up 21%.

    • AAA program generated over $300 million in net savings over the past 2 years, exceeding plan, with an additional $100 million projected for 2026.

    • Adjusted gross margin recovery of approximately 400 basis points is expected in 2026.

    • Dividend raised by 6%.

    Concerns

    3

    • Adjusted gross margin decreased 650 basis points in Q4 FY25 due to commodity inflation, $30 million in incremental tariff expenses, and lower volume.

    • International segment organic constant currency net sales declined 1.9% in Q4 FY25 due to price elasticity and shipment timing.

    • First quarter 2026 adjusted EPS is expected to decline low single digits due to residual commodity/tariff pressure and elevated investment levels.

    Guidance & targets

    13
    CategoryTargetConfidence
    Full-year 2026 total company net sales growth
    4% to 5%
    high materiality
    High
    Full-year 2026 total company organic net sales growth
    2.5% to 3.5%
    high materiality
    High
    Full-year 2026 net price realization
    approximately 10 percentage points
    medium materiality
    High
    First quarter 2026 total company net sales increase
    high single digits
    medium materiality
    High
    Full-year 2026 adjusted gross margin recovery
    around 400 basis points
    high materiality
    High
    Full-year 2026 total cost of goods sold
    low single-digit decline
    medium materiality
    High
    Full-year 2026 adjusted effective tax rate
    25% to 27%
    medium materiality
    High
    Full-year 2026 other expense
    approximately $15 million
    low materiality
    High
    Full-year 2026 interest expense
    $200 million and $210 million
    medium materiality
    High
    Full-year 2026 adjusted EPS growth
    30% to 35%
    high materiality
    High
    First quarter 2026 adjusted EPS growth
    decline low single digits
    medium materiality
    High
    Adjusted EPS growth for Q2-Q4 2026
    grow by double digits each quarter
    medium materiality
    High
    Full-year 2026 capital expenditure
    $425 million to $475 million
    medium materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    North America Confectionery
    Net sales increased 5.3% in Q4 FY25. The Sour Strips acquisition provided a 40 basis point benefit. Volume decreased due to price elasticity, partially offset by strong innovation, holiday programming, and an extra shipping day.
    Net price realization: approximately 10 pointsVolume decrease: approximately 5 points
    		—5.3%——
    North America Salty Snacks
    Net sales increased 28% in Q4 FY25, with organic constant currency growth of 18.2%. Volume growth was driven by core distribution, velocity, innovation, and variety pack expansion. The LesserEvil acquisition contributed approximately 10 points to segment growth.
    Organic constant currency growth: 18.2%Volume growth: approximately 14 pointsNet price realization: 4 points
    		—28%——
    International
    Net sales increased 0.4% to $256 million in Q4 FY25. Organic constant currency net sales declined 1.9% as net price realization was more than offset by volume decline due to price elasticity and a 4-point headwind from shipment timing.
    Organic constant currency net sales decline: 1.9%Net price realization: approximately 2 pointsVolume decline: 4 points
    		$256 million0.4%——

    Operational metrics

    32
    AAA program net savings
    $300 millionabove plan
    past 2 years

    Generated over $300 million in net savings over the past 2 years, above plan.

    AAA program incremental net savings
    $100 million
    2026

    Projected to deliver an incremental $100 million in 2026, the final year of the program.

    Efficiency and transformation program savings
    $230 millionincremental
    2026

    Expected to deliver an incremental $230 million in efficiency and transformation program savings in 2026.

    Adjusted gross margin
    38.3%decreased 650 basis points YoY
    Q4 FY25

    Ahead of expectations due to tariff policy relief and strong supply chain performance.

    Incremental tariff expenses
    $30 million
    Q4 FY25

    Contributed to the decline in adjusted gross margin.

    Advertising and related consumer marketing expenses growth
    4.2%YoY
    Q4 FY25

    Reflects increased investment in Salty Snacks and International.

    Adjusted operating expenses (ex-advertising) growth
    12.6%
    Q4 FY25

    Driven by higher incentive compensation, partially offset by transformation program net savings.

    AAA transformation program net savings
    $160 millionslightly ahead of target
    2025

    Slightly ahead of target, driven by incremental supply chain savings.

    Interest expense
    $48 million
    Q4 FY25

    Interest expense for the quarter.

    Adjusted effective tax rate
    23.4%up from negative 13.7% last year
    Q4 FY25

    Largely driven by fewer renewable energy tax credits versus the year-ago period.

    Capital additions (including software)
    $138 million
    Q4 FY25

    Capital additions in the fourth quarter.

    Full year capital investment
    $455 million
    FY25

    Total capital investment for the full year 2025.

    Dividends distributed to shareholders
    $271 million
    Q4 FY25

    Dividends distributed in the fourth quarter.

    Full year dividends distributed to shareholders
    $1.1 billion
    FY25

    Total dividends distributed for the full year 2025.

    Share repurchase authorization remaining
    $470 million
    current

    Remaining under current authorization; no shares repurchased in Q4 FY25.

    Foreign currency impact on net sales growth
    immaterial
    FY26

    Expected impact of foreign currency on full year 2026 net sales growth.

    Advertising and related consumer spending growth
    double digitsversus prior year
    FY26

    Expected to increase double digits versus prior year to support momentum across the business, including both working and nonworking media.

    Operating expenses (including divisional and corporate) growth
    in line with sales
    FY26

    Reflects increased investment in capabilities, talent, and technology, partially offset by favorability in incentive compensation and incremental transformation program savings.

    Dividend increase
    6%
    current

    Dividend raised by 6% given strong cash flow and confidence in future business performance.

    U.S. Confection retail sales growth
    in line with category
    Q4 FY25

    Reflecting strong performance of innovation, holiday programming, and execution.

    U.S. Salty Snacking retail sales growth
    15.6%accelerated
    Q4 FY25

    Accelerated in the fourth quarter.

    SkinnyPop retail sales growth
    8%versus prior year
    Q4 FY25

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

    Dot's Pretzels retail sales growth
    21%versus prior year
    Q4 FY25

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

    Variety packs contribution to total retail growth
    2 points
    Q4 FY25

    Contributed nearly 2 points to total retail growth in the quarter.

    Variety packs contribution to total retail growth
    1.2 points
    FY25

    Contributed 1.2 points for the full year.

    U.S. Salty Snack business share gain
    40 basis points
    2025

    Gained nearly 40 basis points of share in 2025.

    Reese's International net sales
    $300 millionexceeding
    FY25

    Exceeded $300 million in net sales outside of the U.S. with double-digit growth for the year.

    Acquisitions contribution to growth
    1.2 points
    Q4 FY25

    Reflecting contributions from LesserEvil and Sour Strips.

    Sour Strips acquisition benefit
    40 basis points
    Q4 FY25

    Benefit to North America Confectionery net sales.

    LesserEvil acquisition contribution to segment growth
    10 points
    Q4 FY25

    Contributed approximately 10 points to North America Salty Snacks segment growth.

    LesserEvil acquisition contribution to total growth
    150 basis points
    FY26

    Expected to add approximately 150 basis points to full year 2026 total company net sales growth.

    Portfolio sales under $4
    Three quarters
    current

    Three quarters of portfolio sales are at a price under $4, making benefits widely accessible.

    Industry KPIs

    6
    MetricValueDetails
    Gross margin38.3%%
    Brand platform growthdouble-digit growth%
    Organic net revenue growth4.2%%
    Volume mix vs pricing decomposition9 pointspoints
    Elasticity consumer response commentarymodestly adjusted
    Category growth benchmark channel shift datathird fastest-growing

    Product announcements

    3
    ProductTypeDetails
    Shaq-A-Licious SLAMSlaunch
    Jolly Rancher Heatwavelaunch
    SkinnyPop White Cheddar and other dairy itemsupdate

    Deals & partnerships

    1
    LesserEvilAcquisition of a better-for-you snacking brand.

    Completed the acquisition of LesserEvil in November 2025, strengthening the better-for-you snacking platform.

    Risks & headwinds

    6
    Unprecedented cocoa inflation2025

    significant impact

    Mitigation: Agile hedging and sourcing strategies; AAA program savings; strategic pricing.

    Broader macroeconomic volatility2025

    impacted business environment

    Mitigation: Disciplined execution; strengthened customer relationships; impactful innovation.

    Consumer financial pressure2026

    ongoing strain

    Mitigation: Planned for appropriately in 2026 outlook; portfolio offers widely accessible price points (three quarters under $4).

    Evolving health and wellness trends and GLP-1 adoption2026

    potential demand headwinds

    Mitigation: Incorporated prudent assumptions into 2026 outlook; innovation pipeline includes products like SkinnyPop reformulations.

    Government policy changes2026

    potential impact

    Mitigation: Monitored and planned for appropriately in 2026 outlook.

    Commodity and tariff pressureQ1 FY26

    residual impact

    Mitigation: Significant gross margin recovery projected to begin in Q2 FY26.

    What to watch in Q1 FY26

    5

    Adjusted gross margin recovery

    Q2 FY26
    Current38.3% (Q4 FY25)
    TargetSignificant recovery to begin

    Why it matters

    Gross margin was a significant headwind in Q4 FY25; its recovery is critical for profitability and EPS growth in 2026.

    In the first quarter, we anticipate our overall company adjusted gross margin will continue to face pressure due to consumption of higher-cost commodities and tariff costs, a significant recovery is projected to begin in the second quarter.

    2 min read6 chapters

    Detailed Narrative

    01

    FY25 Performance and Strategic Position

    Hershey delivered consolidated net sales of approximately $11.7 billion in FY25, an increase of 4.4% year-over-year, with organic constant currency growth of 4.2%. The company successfully navigated unprecedented🌐 cocoa inflation and macroeconomic volatility🌐 through disciplined execution, strengthened customer relationships, and impactful innovation. This performance built strong momentum for 2026, which is viewed as an inflection point for accelerating sustainable sales growth and restoring margins.

    02

    North America Confectionery and Salty Snacks Strength

    U.S. Confection retail sales growth was in line with the category in Q4 FY25, driven by innovation and holiday programming. For the full year, Hershey gained market share across instant consumable chocolates, sweets, mints, and seasons. The U.S. Salty Snacking business had an exceptionally strong year, with retail sales growth accelerating to 15.6% in Q4 FY25. SkinnyPop and Dot's Pretzels remained top performers, contributing to a nearly 40 basis point share gain in 2025 and positioning Hershey as the third largest portfolio in the U.S. Salty Snack business.

    03

    International Segment Resilience and Growth

    The International segment achieved full-year organic constant currency net sales growth of 2.2% in 2025 despite challenging market conditions. The teams maintained focus on key markets, resulting in market share gains in Mexico, Brazil, and the U.K. Reese's continued its robust international expansion, recording double-digit growth for the year and exceeding $300 million in net sales outside of the U.S.

    04

    Efficiency and Transformation Programs

    The AAA program has generated over $300 million in net savings over the past two years, surpassing initial plans, and is projected to deliver an incremental $100 million in 2026. These programs, along with agile hedging and sourcing strategies for cocoa, have strengthened the cost structure and enabled investments in talent, technology, and differentiated performance. An additional $230 million in efficiency and transformation program savings are expected in 2026.

    05

    2026 Strategic Priorities and Innovation Pipeline

    Hershey's strategic priorities for 2026 include delivering top-line growth at or above market categories, driving sustainable margin and earnings improvement, and evolving the strategy and organization for the future. The innovation pipeline is strong, with launches like Shaq-A-Licious SLAMS and Jolly Rancher Heatwave, and reformulations for SkinnyPop. Increased brand investments, including double-digit media spend and new campaigns for Reese's and Hershey, are planned to support these initiatives.

    06

    Capital Allocation and Shareholder Returns

    The company continues to prioritize reinvestment in the business, including M&A, as demonstrated by the LesserEvil acquisition in November 2025. Capital additions for FY25 totaled approximately $455 million. Given strong cash flow and future performance confidence, Hershey is raising its dividend by 6% and will evaluate opportunistic share repurchases to return excess cash and enhance long-term shareholder value.

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