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Hershey enjoys 6.3% sales growth in 3Q due to high comfort food demand
The Hershey Co. enjoyed an on-year sales growth of 6.3 percent in its third-quarter to $2.36 billion amid high demand for comfort foods during the pandemic.
While net income dropped slightly in the quarter, from $447 million to $445 million, the company's full-year net sales growth forecast is now up from the previous range of 6 to 8 percent to 8 to 9 percent.
According to CEO Michele Buck, Hershey is raising both sales and earnings guidance for 2021 to reflect elevated consumer demand, improved tax outlook, and optimized brand investment.
She noted that the expected growth could more than offset higher supply chain costs and inflation.
Buck added that Hershey's operational speed and agility enabled them to quickly respond to marketplace changes and develop plans to maintain sales momentum and increase and sustain their margin structure over the long term.
One situation to keep an eye on is their candy inventory, which is shrinking faster than anticipated as demand for comfort foods remains high.
According to Hershey, their sales growth lagged consumer demand as capacity constraints and industry-wide supply chain disruptions resulted in lower retailer and distributor inventory levels.
In August, Hershey’s board authorized a $200 million extra capital spending to deal with increased demand for its brands, especially Reese’s.