Hershey Earnings Call Highlights Resilient Demand, Margin Turn

The Hershey Company ((HSY)) has held its Q1 earnings call. Read on for the main highlights of the call.

The Hershey Company’s latest earnings call struck a confident tone, emphasizing resilient confection demand, robust brand growth and a clear path to margin recovery despite near‑term noise. Management framed Q2 softness as mostly timing related and highlighted broad-based positives, arguing that competitive and macro headwinds are manageable rather than structural.

Strong Easter and Confection Resilience

Easter sell-through exceeded expectations, underscoring the staying power of chocolate even in a choppy macro backdrop. The overall confection category grew in the high single digits year over year, and Hershey exited spring shelf resets in a net positive position across key items and channels.

Branded Growth Momentum for Hershey and Reese’s

Core nonseasonal brands delivered standout growth, with Hershey up about 11% and Reese’s up roughly 10% in the quarter. The company credited tentpole events such as March Madness and stepped-up marketing support for fueling that momentum and reinforcing brand equity.

Snacks Growth and Salty Core Outperformance

The snacks segment grew about 5%, but the real strength came from salty core brands, which climbed nearly 10%. Dots, SkinnyPop and LesserEvil were called out as exceptional performers, and management expects salty operating income to increase at a double-digit pace for the year.

Margin Inflection Starting in the Second Quarter

Management projected a sharp improvement in profitability, with gross margin expected to expand by nearly 300 basis points year over year in Q2. Further acceleration is anticipated in the back half as the company laps higher input costs and benefits from ongoing productivity initiatives.

Favorable Elasticities and Steady Consumer Behavior

Price elasticities have run better than modeled, suggesting consumers are absorbing pricing with less volume pushback than feared. Behavior in the first quarter tracked within expectations, and early impacts from GLP‑1 drugs and SNAP changes were characterized as mild and manageable so far.

Innovation and Portfolio Upgrading

Hershey is leaning into innovation, with new premium Hershey offerings slated for the second half alongside continued work on Brookside and Cadbury lines. The pipeline also includes smores activations and more “better‑for‑you” R&D, with innovation contributing a mid‑ to high single‑digit percentage of total sales.

International Expansion Led by Reese’s

Reese’s continues to gain traction overseas, particularly in the U.K. and broader Europe. The company is scaling through a combination of imports and localized manufacturing and is pushing into newer markets such as Brazil and Mexico to extend the brand’s global footprint.

Seasonal Tentpoles to Support Second-Half Growth

Management sees upcoming tentpole activations as a key driver of back‑half momentum, including Americana‑themed campaigns and 4th of July programming. These efforts, combined with shelf resets, more facings and perimeter merchandising, are expected to add roughly one percentage point of growth for the full year.

Q2 Organic Sales Pressure Mostly About Timing

Headline organic sales are expected to dip slightly in the second quarter due to shipment timing rather than underlying weakness. Pull-forward of spring programs, including smores, stronger-than-expected Easter sell-through and some international customer pull-forward all weigh on Q2 but support the broader year.

Competitive Heat and CMG Share Dynamics

Hershey acknowledged heightened competitive activity in North American confection, with rivals stepping up innovation and merchandising earlier than usual. Recent CMG market share data showed year-over-year softness for Hershey, prompting a renewed focus on execution while asserting that the category backdrop remains healthy.

SNAP and GLP‑1 as Modeled Macro Headwinds

Changes in SNAP waivers across several states and rising GLP‑1 adoption are both modeled as emerging headwinds, but impacts to date have been limited. Management nonetheless expects SNAP-related pressure could build through the year and is watching for potential shifts in snacking behavior as these trends evolve.

One-Time Snacks Headwinds and Logistics Costs

The snacks unit absorbed discrete hits in the quarter, including a voluntary product withdrawal and a delayed distribution center opening that raised logistics expenses. These issues trimmed near-term profitability, but the company labeled them as temporary and largely behind it.

Mix Drag from Private Label in Salty

Despite strong branded salty performance, a shrinking private-label and non-branded business weighed on reported growth versus category consumption. Management expects this deliberate mix shift away from less strategic volumes to continue, accepting the drag in exchange for higher-quality revenue.

Marketing and SM&A Cadence Shifts

Selling, marketing and administrative costs were lighter than expected in Q1 as some spending slipped into later quarters. Even so, Hershey reiterated plans for a double-digit increase in marketing and advertising for the full year, with heavier working media investment skewed toward Q2 and the back half.

Commodity and Macro Cost Watchpoints

The cocoa outlook points to a potential surplus in 2025‑26 and possible price relief, but Hershey remains cautious on long-term commodity risks. Oil-linked costs in packaging and freight are currently contained, yet management flagged them as contingent risks should higher energy prices persist.

Guidance and Outlook Emphasize H2 Strength

The company maintained its full‑year outlook, balancing a modest Q2 organic decline against strong Q1 execution and expected margin inflection. Management highlighted double-digit marketing growth, tentpoles adding about one point of annual growth and reaffirmed a preliminary 2027 organic sales target of 2%–4% while keeping a close eye on macro and commodity volatility.

Hershey’s call painted a picture of a franchise leaning on brand power, innovation and disciplined cost management to navigate a more competitive and uncertain backdrop. For investors, the message was one of solid fundamentals, near-term timing noise and a management team confident that second-half momentum and rising margins can keep the growth story intact.