The Hershey Company Announces First-Quarter 2026 Financial Performance
The Hershey Company (NYSE: HSY) reported a strong start to fiscal 2026, announcing its financial results for the first quarter ended March 29, 2026, alongside a reaffirmation of its full-year sales and earnings outlook. The company highlighted solid demand for its core brands, continued pricing strength, and disciplined execution across its business segments as key contributors to its performance.
Chief Executive Officer Kirk Tanner emphasized that the company has entered the year with momentum and remains firmly on track to achieve its 2026 financial targets. He noted that flagship brands such as Hershey’s and Reese’s played a central role in driving growth, delivering non-seasonal retail sales increases of 11% and 10%, respectively. According to Tanner, Hershey continues to prioritize investments in brand building, innovation, research and development, technology, and workforce capabilities to sustain long-term growth.
Strong Revenue and Earnings Growth
During the first quarter, Hershey generated consolidated net sales of $3.10 billion, representing a 10.6% increase compared to the same period in 2025. On an organic, constant currency basis, sales rose 7.9%, reflecting the company’s ability to drive growth even after adjusting for foreign exchange impacts and acquisitions.
Net income surged to $435.1 million, or $2.13 per diluted share, marking a significant 93.6% increase year-over-year. Adjusted earnings per share came in at $2.35, up 12.4% from the prior-year quarter. These results underscore Hershey’s strong operational execution and effective pricing strategies in a challenging cost environment.
Outlook and Financial Expectations
Looking ahead, Hershey reaffirmed its expectations for the full year. The company anticipates an effective tax rate between 25% and 27%, interest expenses ranging from $200 million to $210 million, and capital expenditures between $425 million and $475 million. Additionally, Hershey expects to deliver approximately $100 million in savings through its Advancing Agility & Automation Initiative.
The company also noted that its adjusted earnings projections exclude potential volatility from mark-to-market gains and losses on commodity derivative contracts, which remain difficult to forecast.
Drivers of Sales Growth
The increase in net sales was largely driven by pricing actions, which contributed roughly 10 percentage points to growth. However, this was partially offset by a modest decline in volume of about 2 percentage points, reflecting consumer sensitivity to higher prices across both North America Confectionery and International segments.
Additional growth drivers included a 2-point contribution from the acquisition of LesserEvil and a 0.7-point benefit from favorable foreign exchange movements. Shipment timing also provided a temporary boost to sales during the quarter.
Margin Performance and Cost Pressures
Hershey reported a gross margin of 39.4%, a notable improvement of 570 basis points compared to the prior year. This increase was supported by pricing gains, reduced losses from commodity hedging activities, and productivity improvements across the supply chain.
However, adjusted gross margin declined slightly by 80 basis points to 40.4%, as rising commodity prices and tariff-related costs weighed on profitability. These cost pressures remain a key challenge for the company, though partially mitigated by efficiency initiatives.
Operating Expenses and Profitability
Selling, marketing, and administrative expenses rose 3.1% year-over-year. Excluding advertising and consumer marketing, these expenses increased only 1.8%, reflecting disciplined cost management. Higher investments in technology and capabilities were offset by reductions in consulting fees and employee-related costs.
Advertising and marketing spending increased 5.8%, driven by double-digit growth in the North America Salty Snacks and International segments. This reflects Hershey’s strategy of reinvesting in brand strength to support long-term growth.
Operating profit reached $640.7 million, up 73.5% from the prior year, resulting in a margin of 20.6%. On an adjusted basis, operating profit rose 12.9% to $686.5 million, with a margin of 22.1%. These gains were primarily driven by higher sales and pricing, which more than offset increased input costs and marketing investments.
Tax Rate and Earnings Adjustments
The company’s reported effective tax rate decreased to 26.6%, driven by favorable foreign rate differentials on commodity hedges. Meanwhile, the adjusted effective tax rate increased slightly to 25.0%, reflecting higher state taxes and changes in geographic income mix.
Hershey also reported $45.8 million in items positively affecting comparability during the quarter, significantly lower than the $238.9 million recorded in the same period last year.
Segment Performance
North America Confectionery
Hershey’s largest segment, North America Confectionery, delivered net sales of $2.49 billion, an increase of 8.3%. Organic, constant currency sales rose 8.0%, driven by strong pricing, which contributed approximately 12 percentage points to growth.
Volume declined by about 4 percentage points due to price elasticity and one fewer shipping day, though this was partially offset by innovation and shipment timing benefits. Retail takeaway in the U.S. candy, mint, and gum category increased 8.1%, indicating resilient consumer demand despite higher prices.
Segment income rose 13.8% to $792.4 million, with margins improving to 31.8%. These gains were driven by pricing and operational efficiencies, offsetting higher commodity and tariff costs.
North America Salty Snacks
The North America Salty Snacks segment posted net sales of $350.1 million, up 26.0% year-over-year. The acquisition of LesserEvil contributed significantly, accounting for approximately 20 percentage points of growth.
Organic sales increased 5.6%, driven by volume gains of more than 5 percentage points. Retail takeaway for salty snacks rose 9.8%, reflecting strong consumer demand and market share gains.
However, segment income declined 18.1% to $34.3 million, primarily due to higher supply chain costs, including those related to a temporary product withdrawal, as well as increased marketing investments. Segment margin fell to 9.8%.
International
Hershey’s International segment reported net sales of $264.2 million, a 16.1% increase year-over-year. Organic, constant currency growth was 9.3%, supported by pricing actions across key markets.
Volume declined slightly due to price sensitivity, though this was partially offset by favorable shipment timing and strong performance in markets such as Brazil.
Segment income decreased by $13.4 million to $15.3 million, with margins dropping to 5.8%. The decline was driven by higher manufacturing and commodity costs, along with increased advertising spending.
Corporate Expenses
Unallocated corporate expenses totaled $155.4 million, a 2.1% decrease from the prior year. This reduction was mainly due to lower consulting fees and decreased compensation-related costs, despite ongoing investments in technology and organizational capabilities.
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