Chocolate Maker Hershey Sweetens Brand Investment Eyeing Fast Start To 2024; Beats On Q3

Hershey Company HSY reported third-quarter FY23 sales growth of 11.1% year-on-year to $3.03 billion, beating the analyst consensus estimate of $2.95 billion.

Hershey's North America Confectionery segment net sales rose 9.9% Y/Y to $2.457 billion. Sales for North America Salty Snacks segment jumped 25.5% to $345.2 million, and the International segment increased 4.4% to $227.2 million.

Selling, marketing and administrative expenses increased 13.1% to $624.3 million.

Gross margin expanded 430 basis points Y/Y to 44.9%, and gross profit rose 22.7% Y/Y to $1.36 billion.

Operating margin expanded 390 basis points to 24.3%, and the operating income for the quarter was $735.9 million.

Adjusted EPS of $2.60 beat the consensus estimate of $2.45.

Hershey held $471.3 million in cash and equivalents as of October 1, 2023.

Michele Buck, President and Chief Executive Officer, said, "As we exit the year, our retail teams are building impactful displays to engage consumers and drive demand while we increase brand investment and partner with retailers to launch exciting innovation to get 2024 off to a fast start."

Outlook: Hershey reaffirmed FY23 net sales growth of about 8%; adjusted EPS growth of 11% - 12%.

HSY expects adjusted EPS of $9.46 - $9.54 versus the consensus estimate of $9.53.

Hershey sees capital expenditure of about $800 million - $850 million.

Price Action: HSY shares are trading lower by 1.1% at $192.34 on the last check Thursday.