Hershey Q4 Earnings Top Estimates, Organic Sales Rise on Pricing

The Hershey Company HSY reported fourth-quarter 2025 results, wherein both the top and bottom lines beat the Zacks Consensus Estimate. On a year-over-year basis, the company’s top line increased, while the bottom line declined, reflecting higher commodity and tariff costs. Management also provided its initial outlook for 2026.

Hershey posted adjusted earnings of $1.71 per share, which dropped 36.4% year over year but outpaced the Zacks Consensus Estimate of $1.40.

Consolidated net sales of $3,091.0 million increased 7% from the year-ago quarter and exceeded the Zacks Consensus Estimate of $3,002 million. On an organic, constant-currency basis, sales rose 5.7%, driven by net price realization (up 9%) and an extra shipping day. Organic volume/mix declined 3%, reflecting elasticity in North America Confectionery and International markets.

Acquisitions contributed 1.2 percentage points to net sales growth, while foreign currency translation had a 0.1-percentage-point favorable impact.

Closer Look at HSY’s Results

The adjusted gross margin was 38.3%, down 650 basis points year over year. Margin pressure stemmed from elevated cocoa and other input costs, tariff expenses of about $30 million, lower volumes and an inventory-related timing impact. These headwinds outweighed gains from pricing, productivity initiatives and savings from the company’s transformation efforts.

Selling, marketing and administrative expenses escalated 12.1% year over year, reflecting higher compensation-related costs and stepped-up brand investment, partly offset by cost-saving initiatives. Advertising and consumer-focused marketing spending rose 4.2%. Excluding these costs, SM&A expenses climbed 15.9%, driven largely by incentive compensation and investments to strengthen organizational capabilities.

Adjusted operating income declined 24% to $529.3 million, while the adjusted operating margin fell 700 basis points to 17.1%.

HSY’s Segment-Wise Discussion

Net sales in the North America Confectionery segment reached $2.48 billion, up 5.3% from the prior-year quarter. On an organic, constant-currency basis, sales advanced 5%, reflecting pricing actions. Volume declined as consumers responded to higher pricing, though this was partially offset by strong holiday demand, innovation and one additional shipping day.

For the 12-week period ended Dec. 28, 2025, retail takeaway for U.S. candy, mint and gum in multi-outlet plus convenience channels rose 6.5% year over year. Segment income declined 10.7% to $722 million, resulting in a segment margin of 29.1%, down 520 basis points from the prior year.

The North America Salty Snacks segment posted quarterly net sales of $357 million, representing 28% growth year over year. Results included contributions from the LesserEvil acquisition. On an organic, constant-currency basis, sales increased 18.2%, driven by higher volumes supported by strong retail demand, variety pack expansion, shipment timing tied to early-2026 programs and an additional shipping day. Pricing also contributed to growth during the quarter.

For the 12-week period ended Dec. 28, 2025, U.S. salty snack retail takeaway in the multi-outlet plus convenience channels increased 15.6%, excluding LesserEvil. Segment income rose 38.1% year over year to $75.3 million, and the segment margin expanded 160 basis points to 21.1%.

International segment net sales were $255.6 million, increasing 0.4% year over year. On an organic, constant-currency basis, sales declined 1.9%, as pricing gains were offset by lower volumes related to shipment timing and consumer elasticity. The segment reported a loss of $31.6 million compared to income of $29.6 million in the prior-year quarter.

HSY’s Financial Health Snapshot

Hershey ended the quarter with $925.9 million in cash and cash equivalents, long-term debt of $4.68 billion and total stockholders’ equity of $4.64 billion. Capital expenditures totaled approximately $455 million for full-year 2025.

What to Expect From HSY in 2026?

For full-year 2026, Hershey expects net sales to increase in the range of 4-5%, driven by pricing actions alongside higher levels of innovation, expanded cultural and seasonal initiatives and increased advertising to support consumer demand. The outlook includes an estimated 150-basis-point contribution from acquisitions, while foreign currency exchange is expected to have a neutral impact based on current rates.

Adjusted diluted earnings per share are expected in the range of $8.20-$8.52, calling for growth of 30% to 35%. Management expects sales growth and gross margin improvement to more than offset higher investments in brands, capabilities and technology, as well as increased interest expense.

For 2026, the company anticipates capital expenditures in the range of $425 million-$475 million and approximately $100 million in savings from continued progress under its Agility & Automation Initiative.

This Zacks Rank #2 (Buy) stock has rallied 22.8% in the past three months compared with the industry’s growth of 18.7%.

Other Stocks to Consider

Simply Good Foods SMPL, a consumer-packaged food and beverage company, currently sports a Zacks Rank #1 (Strong Buy). SMPL delivered a trailing four-quarter earnings surprise of 5.5%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Simply Good Foods’ current fiscal-year earnings suggests growth of 1.6% from the year-ago figure.

Mama's Creations, Inc. MAMA manufactures and markets fresh deli-prepared foods in the United States. At present, MAMA sports a Zacks Rank of 1. 

The consensus estimate for Mama's Creations’ current fiscal-year sales and earnings implies growth of 39.9% and 44.4%, respectively, from the year-ago figures. MAMA delivered a trailing four-quarter earnings surprise of 133.3%, on average.

J&J Snack Foods Corp. JJSF manufactures, markets, and distributes nutritional snack food and beverages, with a Zacks Rank #2 at present. JJSF delivered a trailing four-quarter earnings surprise of 4.5%, on average.

The Zacks Consensus Estimate for J&J Snack Foods’ current fiscal-year sales and earnings indicates growth of 1.7% and 4.5%, respectively, from the year-ago figures. 

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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

Zacks Investment Research