Hershey’s third-quarter net sales increased 3% year over year to $3.2755 billion, as higher prices offset declining candy volumes. The company raised its 2026 adjusted earnings-per-share growth forecast to 36%-38.5%, from 32.5%-35%, and expects full-year sales to grow about 5%. Management said consumer spending and logistics costs remain variables, and that current conditions could weigh on earnings in 2027.
Pricing lifts candy revenue as volumes fall
Net sales in North America Confectionery reached $2.6565 billion, up 1.6% year over year. Net price realization added about 13 percentage points, while volume fell 11%, indicating that higher prices have yet to bring volumes back up. Adjusted operating profit rose 66.2% to $949.7 million, with a segment margin of 35.8%.
Hershey said the U.S. candy, mint and gum category grew 0.8% over the 12 weeks through the third quarter. The company’s market share was affected by a tough comparison with new product launches in the year-earlier period. Management said share performance improved in July and August, before September faced a difficult comparison with Reese’s Oreo sales a year earlier. That pressure is expected to continue into the fourth quarter.
The company is not planning broad price cuts. Instead, it is responding to consumers’ focus on value through a mix of package sizes and price points, along with targeted promotions. CEO Kirk Tanner said Hershey will continue investing in innovation, marketing and merchandising to pursue profitable market share.
LesserEvil boosts salty-snack sales
Net sales in North America Salty Snacks rose 22.3% to $392.7 million, with the LesserEvil acquisition contributing about 20 percentage points. Excluding the acquisition, U.S. salty-snack sales grew 4% over the 12-week period, and the business gained market share. Segment profit, however, fell 17.9% to $47.4 million as manufacturing, transportation and logistics costs increased.
Hershey expects to add salty-snack capacity in the first half of 2027 to meet demand for single-serve and multipack products. The company also plans about $450 million in capital spending in 2026, focused mainly on manufacturing capacity and automation.
International sales decline as margins recover
International net sales fell 7.5% to $226.4 million. Volume declined 14%, more than offsetting the benefit from strategic price increases. The segment recorded a $30 million loss as higher input costs and weaker volume outweighed improvements in production efficiency.
Hershey’s consolidated adjusted gross margin rose 1,090 basis points year over year to 42.7%, driven mainly by pricing and productivity savings. Adjusted operating profit increased 78.5% to $754 million, with an operating margin of 23.0%. Third-quarter adjusted EPS was $2.64, up 103.1% from a year earlier.
The company expects business realignment and efficiency initiatives to generate $100 million in savings in 2026. Tariff refunds added a total of $0.25 to full-year EPS: $0.22 was received in the third quarter and $0.03 in the second quarter. Third-quarter advertising and consumer marketing spending rose 17.1% year over year, with double-digit increases in both North American divisions. Marketing return on investment improved 8%, which management attributed to the use of real-time marketing mix models.
2027 sales target holds, but earnings outlook is cautious
Management maintained its 2027 sales growth target of 2%-4%, in line with Hershey’s long-term growth framework, and continues to target low-double-digit growth in adjusted EPS. CFO Dave Hulays said earnings could fall short of the company’s earlier expectations if current economic and cost conditions persist. Hershey cited weaker consumer demand and changes in the cost environment as potential factors affecting results.
Tanner said candy sales in the convenience-store channel declined 5% in September, as higher fuel prices and living costs pressured spending. Hershey expects to implement further low-single-digit price increases in the fourth quarter, while facing a comparison with larger price increases in the prior year.
The company expects its 2027 product pipeline to be 50% larger than its 2026 pipeline, with launches focused on candy, premium products and functional snacks. Management expects new products to contribute three times as much to growth as this year’s pipeline. Marketing, product innovation and ongoing low-single-digit price increases are the company’s main planned supports for 2027 sales growth; results will also depend on consumer conditions.