Jul 28, 2020
Strong Q2 earnings for Hershey yield potential positive Halloween results
The Hershey Company announced net sales and earnings for the second quarter ended June 28, 2020, and reported a consolidated net sales of $1,707.3 million, which is above estimated sales numbers. Strong sales in the second quarter now has the industry looking to the second half of the year as it relates to Halloween and changes the pandemic may have on trick-or-treaters and consumers purchasing habits.
“We delivered profitable sales growth in North America in the second quarter despite the increased complexities presented by the COVID-19 pandemic. Our iconic brands and great execution enabled us to gain 225 basis points of confectionery market share. In addition, strong cost management enabled us to offset many of the COVID-19 related financial pressures and deliver adjusted earnings per share in line with last year,” said Michele Buck, president and chief executive officer for The Hershey Company.
“I could not be prouder of how the company focused its time and resources on our employees’ physical, emotional and economic well-being while serving the needs of our customers, consumers and communities during this difficult time. We are encouraged by the improvements in our business performance and the momentum we have exiting the second quarter,” said Buck. “We believe our great brands, advantaged margin structure, strong supply chain, and agile investment mindset will enable us to deliver solid stockholder returns going forward.”
The company does expect accelerated sales growth in the second half of the year based on momentum exiting the second quarter, assuming no significant disruption to current consumer trends, and expects pricing and cost management to drive margin expansion in the second half of the year. “We remain confident that our healthy balance sheet and strong cash flow will enable us to meet current business needs, invest for the future and return cash to stockholders,” note Hershey in a press release.
Hershey does not currently expect seasonal performance to have a material effect on second half financial results, though the ramifications of a resurgence of COVID-19 cases on consumer participation in seasonal activities and the resulting retail impact remains uncertain.
Despite a Harris Poll survey, which indicated that “Only 27% of respondents plan to take their kids trick-or-treating this year,” the industry is eagerly awaiting positive results of the upcoming Halloween holiday, especially since it falls on a weekend this year.