Hershey Q3 Earnings & Sales Beat Estimates, 2025 Outlook Raised

The Hershey Company HSY reported third-quarter 2025 results, wherein the top and bottom lines beat the Zacks Consensus Estimate. Additionally, on a year-over-year basis, the company’s top line increased, but the bottom line declined. Management raised its 2025 outlook for both net sales and earnings per share (EPS).

Hershey posted adjusted earnings of $1.30 per share, which fell 44.4% year over year but beat the Zacks Consensus Estimate of $1.09.

Consolidated net sales of $3,181.4 million increased 6.5% from the year-ago quarter and exceeded the Zacks Consensus Estimate of $3,125 million. On a constant-currency (cc) basis, organic sales rose 6.2% due to approximately six percentage points of net price realization. 

Volume was modestly positive, reflecting the cadence of promotional programming within the North America Salty Snacks segment and the timing of shipments in the International segment. The acquisition of Sour Strips contributed a benefit of 0.3 percentage points, while the impacts of foreign currency exchange were negligible for the third quarter.

Closer Look at HSY’s Results

Hershey’s adjusted gross margin was 31.8%, contracting 850 basis points year over year, primarily reflecting higher commodity and tariff costs and unfavorable mix, which more than offset the benefits from net price realization, supply-chain productivity gains and savings from the company’s transformation program.

Selling, marketing and administrative (SM&A) expenses increased 1.5% year over year. The increase was mainly driven by higher incentive compensation and non-people operating costs, partially offset by efficiencies and transformation program savings.

Advertising and related consumer marketing expenses declined 5% year over year, as efficiencies in North America Confectionery were partially offset by higher spending in North America Salty Snacks and International. Excluding advertising and related consumer marketing, SM&A expenses rose 5% from the prior-year period, reflecting higher incentive compensation and consulting costs.

Adjusted operating profit decreased 35.4% year over year to $422.5 million, surpassing our estimate of $417.1 million. The adjusted operating margin contracted 860 basis points year over year to 13.3%. The decline was driven by higher commodity and tariff costs and an unfavorable mix, which more than offset pricing gains, supply-chain productivity and transformation program savings.

HSY Provides Insights by Segment

Hershey’s North America Confectionery segment generated net sales of $2.62 billion in the third quarter of 2025, up 5.6% year over year. On an organic, constant-currency basis, sales grew 5.2%, fueled by approximately seven percentage points of net price realization. Volume declined about 1%, reflecting solid innovation performance and continued strength across core brands, which partially offset the effects of price elasticity. We expected segmental sales to increase 4.2% year over year to $2.58 billion.

U.S. candy, mint, and gum retail takeaway for the 12-week period ended Sept. 28, 2025, in the multi-outlet plus convenience channels rose 5.4% year over year. Segment income declined 21.2% to $571.5 million, resulting in a segment margin of 21.8%, down 750 basis points year over year.

Hershey’s North America Salty Snacks segment posted net sales of $321 million in the third quarter of 2025, rising 10% from the prior year and beating our estimate of $313.9 million. Volume growth of approximately 11 percentage points reflected the timing of promotional programming, innovation launches and media investments. Net price realization was about 1 percentage point lower due to the timing of promotions compared with the previous year.

For the 12 weeks ending Sept. 28, 2025, Hershey’s U.S. salty snack retail takeaway in the multi-outlet plus convenience channels rose 14.2%. Segment income increased 6.9% year over year to $57.7 million, while the segment margin declined 50 basis points to 18%. 

Hershey’s International segment delivered net sales of $244.8 million, above our estimate of $222.8 million and up 12.1% year over year. Price realization contributed approximately 7 percentage points, reflecting strategic pricing actions across key markets, while volume increased about 6 percentage points, supported by strong double-digit growth in Brazil and the timing of shipments in Europe and Mexico. These gains were partially offset by price elasticity in several international markets. The segment reported a loss of $13.6 million compared with income of $14.2 million in the prior-year quarter.

HSY’s Financial Health Snapshot

HSY ended the quarter with cash and cash equivalents of $1.16 billion, long-term debt of $4.68 billion, and total stockholders’ equity of $4.56 billion. Management expects a capital expenditure of $425 million for 2025.

HSY Stock Past 3 Months' Performance

What to Expect From HSY in 2025

The company raised its 2025 financial outlook, reflecting improved business momentum. Net sales are expected to increase 3% year over year compared with the previous guidance of “up at least 2%.” This outlook includes an expected 40-basis-point benefit from the Sour Strips acquisition and an anticipated 30-basis-point headwind from foreign currency translation.

On the earnings front, the company expects reported earnings per share (EPS) to decline 48-50%, a slight improvement from the prior mentioned 50% decline. Adjusted EPS is projected to decrease 36-37%, narrowing to the upper half of the previous range of down 36-38%. The decline primarily reflects higher commodity and tariff costs, an unfavorable sales mix, and increased investments in the company’s transformation and productivity initiatives.

Tariff expenses are forecast between $160 million and $170 million for 2025. The company continues to advance its Agility & Automation Initiative, which is expected to deliver $150 million in savings during 2025. These savings, combined with ongoing supply-chain productivity improvements and disciplined cost management, are intended to help offset continued input cost inflation and tariff pressures.

This Zacks Rank #3 (Hold) stock has lost 9.4% in the past three months compared with the industry’s decline of 8.9%.

Better-Ranked Stocks

We have highlighted three better-ranked stocks from the Consumer Staples sector, namely United Natural Foods, Inc. UNFI, PepsiCo, Inc. PEP and Ollie's Bargain Outlet Holdings OLLI.

United Natural is the leading distributor of natural, organic and specialty food and non-food products. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

UNFI delivered an earnings surprise of 416.2% in the trailing four quarters, on average. The Zacks Consensus Estimate for United Natural’s current fiscal-year sales and earnings indicates growth of 2.5% and 167.6%, respectively, from the year-ago reported figures.

PepsiCo is one of the leading global food and beverage companies. It presently carries a Zacks Rank #2 (Buy).
 
The Zacks Consensus Estimate for PepsiCo’s current financial-year sales indicates year-over-year growth of 1.8%, whereas that for EPS suggests a decline of 0.6%. PEP has a trailing four-quarter negative earnings surprise of 1.1%, on average.

Ollie's Bargain is a value retailer of brand-name merchandise at drastically reduced prices and currently carries a Zacks Rank #2. OLLI delivered a trailing four-quarter earnings surprise of 4.2%, on average.

The Zacks Consensus Estimate for Ollie's Bargain’s current fiscal-year sales and earnings indicates 16.4% and 16.5% rallies, respectively, from the year-earlier reported levels.

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This article originally published on Zacks Investment Research (zacks.com).

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