The Hershey Co. is continuing the momentum it gained from the pandemic, to the point where constraints on the supply chain are the only thing holding it back.
Hershey had sales growth of 6.3% year-over-year in its third quarter, to $2.36 billion, setting up a rise in the company’s predictions for the year. Full-year net sales growth is now predicted at 8% to 9%, up from the previous range of 6% to 8%. This left company execs optimistic even though net income dropped slightly in the quarter, to $445 million from $447 million.
“Our continued focus on operating with speed and agility has enabled us to respond quickly to changes in the marketplace and develop plans to maintain sales momentum, increase production and sustain our advantaged margin structure over the long term,” CEO Michele Buck said in a statement. “We are raising both sales and earnings guidance for 2021 to reflect elevated consumer demand across markets, an improved tax outlook and optimized brand investment, which, collectively, are expected to more than offset higher supply chain costs and inflation.”
One situation to keep an eye on is inventory. With demand for comfort foods still high, candy inventories are shrinking even faster than anticipated.
“This [sales] growth lagged consumer demand as capacity constraints and industry-wide supply chain disruptions resulted in lower retailer and distributor inventory levels,” Hershey’s statement said.
Hershey’s board authorized $200 million in extra capital spending in August to help the company deal with increased demand, for Reese’s and its other brands, Buck says.
