HERSHEY, PA. — Sales for the salty side of Hershey Co.’s portfolio are growing. Strong consumer demand for salty snacks, along with chocolate and other confectionery products, pushed the company to increase its full-year sales and earnings forecast on the heels of a strong first quarter.
Net income for the three months ended April 3 was $533 million, equal to $2.66 per share on the common stock, up 35% from $396 million, or $1.96 per share, in the same period a year ago. Sales for the quarter increased 16% to $2.67 billion from $2.33 billion.
Executives at the company now expect full-year sales growth between 10% and 12% and reported earnings per share growth between 8% and 11%.
“Our fast start, sustained consumer relevancy and increased visibility into our recently acquired businesses give us the confidence to increase our outlook despite an increasingly challenging and inflationary environment,” said Michele G. Buck, president and chief executive officer at Hershey, during an April 28 conference call with analysts.
Investments to increase volume and expand distribution across Hershey’s North America Salty Snacks business boosted segment sales but weighed on profits. Net income for the segment fell 16% to $21 million in the quarter, with higher costs for logistics and materials — particularly cooking oils sourced from eastern Europe — pressuring earnings. Sales for the segment increased 86% to $226 million.
The SkinnyPop and Pirate’s Booty brands saw increased household penetration and frequency. SkinnyPop’s retail sales were up 13%, gaining 60 basis points of ready-to-eat popcorn share in the quarter, while sales of Pirate’s Booty grew 55%. Both brands benefited from consumers seeking “permissibility and convenience” as they returned to pre-pandemic routines, “including school lunches, road trips and socializing with friends,” Ms. Buck said. That dynamic was reflected across both multipack and instant consumables products, which posted combined retail sales growth of 36%.
Sales of Dot’s Homestyle Pretzels surged 103% following significant distribution gains. The brand, which offers a range of boldly seasoned snacks, gained 630 points of pretzel share and now holds 17% of total pretzel category share as of the latest 12-week period.
The company in December completed its acquisition of Dot’s Pretzels, the owner of Dot’s Homestyle Pretzels, and Pretzels Inc., a co-manufacturer for Dot’s and others, for a combined purchase price of $1.2 billion.
Hershey’s North America Confectionery segment posted net income of $782 million, a 22% increase from the prior-year period. Sales for the segment were $2.2 billion, up 12% from the same period a year ago, driven by growth in take-home chocolate sales and strength across the Jolly Ranchers and Twizzlers brands.
Capacity restraints continued to limit the company’s ability to fully satisfy demand, particularly for Reese’s, its largest business. Hershey’s confectionery share declined 144 basis points in the quarter but is still approximately 38 basis points higher than pre-pandemic levels.
Pricing remains a key lever driving growth across all segments as the company focuses on building up new manufacturing lines and a new distribution center. Demand in response to price increases was stronger than expected for the quarter but could slow down later in the year, Ms. Buck warned.“The large majority of our sales were related to stronger price elasticities that have been realized in the marketplace,” she said. “As we look further out in the year, we anticipate that we’ll see some moderation on those elasticities, perhaps back to more historic levels. A lot of that is driven by the reduction in government subsidies and the continued inflation we think consumers will experience.”