The candy maker booked higher profit and revenue in the fourth quarter from a year earlier, as consumers bought more of its chocolate and other treats even while the coronavirus pandemic curtailed many holiday gatherings.
Hershey said Thursday that its sales rose 5.7% to $2.19 billion in the fourth quarter, topping analysts’ expectations as its chocolate brands gained market share in North America.
Hershey Chief Executive Michele Buck said the results showed how creative customers were at finding ways to celebrate the holidays even during the pandemic.
She said that Hershey is poised to have strong Valentine’s and Easter sales and that major retailers are setting out holiday candy early this year. “The sooner the product is out there, the sooner the consumer starts to celebrate,” Ms. Buck said in an interview.
Shares rose about 1% to $147.89.
Throughout the pandemic, Hershey has adjusted plans for seasonal candy, such as changing the assortment of Halloween candy it came out with last year to account for fewer trick-or-treaters. It also has followed coronavirus case counts by region to determine where people might be buying more candy for at-home celebrations as opposed to gatherings.
Hershey, which also makes Reese’s peanut butter cups, Twizzlers and SkinnyPop popcorn, said its core chocolate brands gained market share in North America in the recent quarter.
The company is increasing advertising spending this year to keep the momentum going, Ms. Buck said. Hershey is investing in more brands including smaller ones that don’t normally get such attention. For example, Hershey is introducing a new type of Whatchamacallit chocolate bar called the Whozeewhatzit.
“We are committed to profitably spending on our brands to keep market share,” Ms. Buck said.
Despite buying other snack brands like popcorn and protein bars in recent years, Hershey’s chocolate and candy business in North America remains top priority, Ms. Buck said.
“It is the mother ship. It’s our profit engine. It’s growing,” she said. “We want to make sure we don’t spread ourselves too thin.”
Hershey said it bought chocolate ingredients when there was more supply than demand earlier in the pandemic, and that it relies on cocoa butter more than cocoa beans, helping insulate it from the recent spike in cocoa prices.
Not all of Hershey’s business was sweet in the latest quarter. Its gum and mint business still struggled from social distancing measures limiting the need for breath freshening. The pandemic and resulting economic trouble also continued to weigh on Hershey’s business in China, India, Brazil and Mexico in the quarter.
Mondelez International Inc., which makes Oreo cookies and several chocolate brands internationally, said last week that its sales in China had improved, while its business in Mexico was still suffering. Mondelez’s North America comparable sales rose 4.5% in the fourth quarter.
Hershey said its quarterly comparable sales in North America rose about 9%.
Hershey said its net profit rose 41% to $291.4 million in the fourth quarter compared with the prior year. Excluding one-time items such as acquisitions, its adjusted earnings of $1.49 a share topped analysts’ estimate of $1.43 a share, according to FactSet. Revenue rose 5.7% to $2.19 billion. Analysts expected $2.11 billion.
Write to Annie Gasparro at [email protected]
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