One of America’s sweetest confectionery suppliers, The Hershey Company (HSY), is in limbo following some bittersweet news. Former PepsiCo CEO and current CEO of Wendy’s, Kirk Tanner, will succeed current chief Michele Buck as President and CEO, effective next month. The unexpected development comes as Hershey’s stock has grossly underperformed over the past three years. Surprisingly, initial news of the appointment earlier this month dented HSY stock, although it has now stabilized around the $165 level, according to TipRanks’ chart data.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
- Make smarter investment decisions with TipRanks' Smart Investor Picks, delivered to your inbox every week.
While this move follows Buck’s retirement announcement in January 2025, the Board’s choice to bypass the standard 18-month transition period underscores the urgency behind the decision. Hershey’s exceptionally weak Q1 2025 earnings, paired with a bleak full-year outlook, likely accelerated the leadership change.
Although incoming CEO Tanner is expected to bring strategic shifts—drawing from his experience at Wendy’s—Hershey’s challenges appear more structural than managerial. As such, I remain cautiously Neutral on HSY stock.
Taste Testing HSY’s Performance Figures
A closer look at Hershey’s first-quarter earnings reveals why the board turned to an external candidate for its next CEO. The strong growth seen in fiscal 2022 and 2023—with annual revenue increases of 16.1% and 7.2%, respectively—now feels like a distant memory. Momentum slowed sharply in fiscal 2023, when revenue inched up just 0.33% to $11 billion. The downturn accelerated in Q1 2025, as consolidated net sales plunged 14% to $2.8 billion, with organic sales falling 13.2%. Net income took a dramatic hit, dropping 72%. As TipRanks data shows, earnings from Hershey’s U.S. confectionery division have been hardest hit, alongside weakening stock prices.
The outlook for the rest of the year offered little relief. HSY now expects full-year net sales growth of “at least 2%,” driven more by pricing than any real volume recovery. Even more concerning, the company projects a full-year adjusted EPS decline in the “mid-30% range,” underscoring the depth of the challenges it faces.
Market Headwinds Leave Sour Aftertaste
Hershey is grappling with multiple headwinds. Chief among them is the sharp rise in cocoa prices, which has forced the company to implement price increases. For elastic goods like chocolate, higher prices typically lead to a drop in demand, and that’s precisely what Hershey is seeing.
In addition to rising cocoa costs, the company is facing broader challenges, including tariffs and global trade tensions. Notably, Hershey flagged a potential tariff impact of up to $100 million per quarter in the second half of 2025 due to cocoa-related duties.
Compounding these pressures is a challenging macroeconomic environment. Consumers are increasingly focused on value, and the growing use of GLP-1 weight-loss drugs, such as Zepbound, is reducing snack consumption, posing a unique challenge for indulgence-focused brands like Hershey.
Kirk Tanner Arrives to Rescue HSY
Against this backdrop, the rapid appointment of Tanner appears to be a strategic and necessary step as Hershey seeks to accelerate its long-term vision of becoming a “leading snacking powerhouse”—a goal that has seen limited progress under Buck, leaving the company still heavily reliant on its core confectionery business.
In the first quarter, Hershey’s North America Confectionery segment generated $2.3 billion in net sales. In comparison, the North America Salty Snacks segment brought in just $277.8 million—a modest 1% increase from the same period last year. This underscores the company’s ongoing struggle to diversify meaningfully beyond its core sweets business.
Tanner brings relevant experience to the table. Before his short tenure at Wendy’s, he spent nearly 30 years at PepsiCo, including as Senior Vice President of Frito-Lay North America’s West Division—an industry leader in salty snacks known for strong marketing and brand innovation. That background likely played a key role in his selection.
At Wendy’s, Tanner helped lead notable consumer-facing initiatives that resonated with younger consumers—a demographic that Hershey has struggled to engage. Tanner also prioritized tech-forward strategies, including Wendy’s rollout of AI-powered voice ordering in drive-thrus, hinting at a broader innovation mindset he may bring to Hershey.
Tanner’s Strategic Options for Sweetening HSY’s Performance
Like the proverbial “kid in a candy store,” Tanner will have many options to help optimize and grow Hershey’s business. With a favorable debt-to-asset ratio, Tanner could pursue mergers and acquisitions to broaden Hershey’s product portfolio and reduce its financial reliance on the volatile cocoa market. In April, Hershey announced it had entered into a definitive agreement to acquire LesserEvil, a snack brand featuring popcorn and puffs, dedicated to providing a “healthier, cleaner alternative to big snack names.”
Within the company, Tanner is likely to leverage his experience at PepsiCo to implement more profound cost-saving initiatives to defend Hershey’s withering margins. Lastly, he may prioritize a more robust expansion of Hershey’s brands into underdeveloped international markets and non-retail channels, which currently make up only a small portion of Hershey’s overall business. In any event, investors should be prepared for significant changes at The Hershey Company over the coming year.
Is The Hershey Company a Buy, Sell, or Hold?
Turning to Wall Street, HSY sports a Hold consensus rating based on 15 analyst ratings in the past three months, which include one Buy, 11 Hold, and two Sell ratings. HSY’s average stock price target of $161.15 implies a downside potential of ~2% over the next twelve months.
Earlier this month, Alexia Burland Howard from Bernstein assigned HSY a Hold rating and a price target of $155. She cautioned that “the unexpected early transition of Mr. Kirk Tanner as the new CEO raises concerns about potential changes in earnings expectations. Given his recent history at Wendy’s, there is a possibility that he might adjust earnings forecasts downward, especially considering the challenges Hershey faces with rising cocoa costs and weak volume trends.”
HSY’s Bitter Near-Term Outlook Overshadows Sweet Long-Term Potential
While Hershey has lagged in adapting to fast-evolving consumer snacking trends, Tanner appears well-suited to accelerate the company’s transformation. Still, the road ahead won’t be easy. In the near term, Hershey faces significant challenges, including continued margin pressure from elevated cocoa prices and mounting tariff costs. Tanner will need to strike a delicate balance—stabilizing the core chocolate business while also growing the company’s footprint in the broader snacking market. It’s a challenging task, and given the mix of near-term headwinds and long-term potential, I remain Neutral on HSY until there are more apparent signs of a turnaround. The company’s Q2 earnings call on July 30 is likely to be a huge signpost of things to come.
That said, investors can take some comfort in Hershey’s relatively attractive valuation. The stock currently trades at a P/E ratio of 20.3—nearly 11% below the median of 22.44 for the Consumer Staples sector—and offers a solid dividend yield of 3.33%.