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DATE
Thursday, April 30, 2026 at 8:30 a.m. ET
CALL PARTICIPANTS
- President and CEO — Kirk Tanner
- Senior Vice President and CFO — Steven Voskuil
- Vice President, Investor Relations — Anoori Naughton
TAKEAWAYS
- North America Salty Core Brands Growth — Nearly 10% increase, primarily driven by strong performance in Dots, SkinnyPop, and LesserEvil, contrasting with declines in the private label segment.
- Gross Margin Outlook — CFO Voskuil said, “we’re expecting in Q2 gross margins to increase by nearly 300 basis points versus the prior year period.”
- Organic Sales Guidance — Organic sales in the North America confection segment are expected to be “slightly down in Q2 due to that timing,” attributed to Easter sell-through pull-forward and international shipment shifts.
- Marketing and Advertising Investment — Full-year marketing and advertising expense is expected to rise by double digits, with delayed nonworking media slipping into Q2 and working media tuned toward spring activations.
- Tentpole Events — CEO Tanner said, “Our tentpole will deliver a full point of growth,” referencing planned in-store occasions such as Americana and the Hershey movie partnership.
- Premium Chocolate and Innovation — New premium Hershey product launches and significant pipeline development in sweets and salty are planned for the second half, with management emphasizing a focused innovation strategy targeting premium, sweets, and better-for-you categories.
- International Growth Strategy — International expansion for Reese’s continues, utilizing a blended model of imports and local manufacturing, with in-sourcing considered upon reaching scale.
- Pack Architecture and Merchandising Reset — Expanded SKU presence and refreshed pack formats (such as stand-up bags) across mass, grocery, dollar, and drug channels are designed to enhance shelf productivity and consumer engagement.
- Elasticity Trends — Price elasticity remains more favorable than planned, including in instant consumables, with continued conservatism embedded in the sales outlook pending complete rollout of price pack architecture.
- Functional Snacking Expansion — The company reports current high double-digit growth in its functional snacking business, supported by R&D and innovation efforts such as a new JV with VivaKi targeting breakthrough protein delivery.
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RISKS
- CEO Tanner stated, “we plan for this headwind to increase over the course of the year with SNAP,” citing possible intensification of consumer confusion and impact as SNAP waivers expand.
- Kirk Tanner said, “There will continue to be a drag,” on snack segment results from private label decline, which management expects to persist in the near term.
- Management disclosed higher logistics costs in salty snacks segment, attributed to a delayed DC opening and a voluntary product withdrawal, which have now concluded but affected margins in the reported period.
- CEO Tanner indicated ongoing macro headwinds from elevated geopolitical uncertainty and higher gas prices, qualifying that “the macro environment is tracking within our expectations,” yet continuing to monitor their effects closely.
SUMMARY
Management underscored a positive outlook for the second half, anchored by tentpole event execution and innovation launches focused on premium, sweets, and functional snacking. Portfolio resets, including expanded SKU facings and new pack architectures across major channels, are intended to enhance shelf presence and support topline momentum. North America confection organic sales are anticipated to dip in the second quarter due to shipment timing and Easter sell-through pull-forward, but management affirmed consumption trends remain consistent and expects a rebound beginning in May. Double-digit marketing investment growth is planned, with spending weighted towards upcoming quarters to amplify seasonal activations and tentpole campaign visibility. The international division continues to advance Reese’s penetration in Europe through a scale-driven in-sourcing strategy, leveraging local market learnings for expansion in Brazil and Mexico. Margin improvement is projected to accelerate from Q2 onward, as favorable gross margin comps and stabilization in commodity logistics costs offset lingering private label and non-recurring expenses in snacks.
- CEO Tanner specified, “GLP-1, continue to enjoy the category in smaller portions,” and described confection as relatively insulated from this health trend based on internal research.
- Salty snack profitability is expected to recover in subsequent quarters, as recent discrete costs diminish and favorable mix from core brands is emphasized.
- Functional snacking’s double-digit expansion is attributed to focused R&D and will remain a priority investment area, with additional breakthroughs anticipated from ongoing partnerships.
- Innovation contributed a high single-digit percentage of total company sales over the past three years, with concentrated growth resources now targeting premium, sweets, and better-for-you categories.
INDUSTRY GLOSSARY
- SNAP: Supplemental Nutrition Assistance Program; a U.S. government food assistance benefit affecting consumer packaged goods demand.
- GLP-1: Glucagon-Like Peptide-1; a class of drugs influencing appetite and thus potentially impacting category consumption patterns.
- DC: Distribution Center; key logistics hub, with operational delays affecting supply chain costs and sales timing.
- Tentpole Events: Major, planned merchandising occasions aligned with holidays or promotions, intended to drive incremental retail sales outside of primary seasonal windows.
- Price Pack Architecture: Strategic assortment of product pack sizes and price points designed to balance elasticity and consumer preferences.
Full Conference Call Transcript
Operator: Greetings, and welcome to the Hershey Company First quarter 2026 question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded. I’d now like to turn the call over to your host, Anoori Naughton, Vice President of Investor Relations for the Hershey Company. Thank you. You may begin.
Anoori Naughton: Good morning, everyone. Thank you for joining us today for the Hershey Company’s First Quarter 2026 Earnings Q&A session. I hope everyone has had the chance to read our press release and listen to our prerecorded management remarks,, both of which are available on our website. In addition, we have posted a transcript of the prerecorded remarks. At the conclusion of today’s live Q&A session, we will also post a transcript and audio replay of this call. Please note that during today’s Q&A session, we may make forward-looking statements that are subject to various risks and uncertainties. These statements, including expectations and assumptions regarding the company’s future operations and financial performance. Actual results could differ materially from those projected.
The company undertakes no obligation to update these statements based on subsequent events. A detailed listing of such risks and uncertainties can be found in today’s press release and the company’s SEC filings. Finally, please note that we may refer to certain non-GAAP financial measures that we believe provide useful information for investors. The information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. A Reconciliations for the GAAP results are included in this morning’s press release. Joining me today are Hershey’s President and CEO, Kirk Tanner; and Hershey’s Senior Vice President and CFO, Steve Voskuil.
With that, I will turn it over to the operator for the first question.
Operator: [Operator Instructions] Our first question comes from the line of Andrew Lazar with Barclays.
Andrew Lazar: I was hoping maybe to focus in a little bit on North America confectionery to start. I think in the press release, you mentioned that lower year-over-year CMG market share due to increased marketplace competition. And I know investors are understandably sensitive to this, just given the significant drop in cocoa prices of late and the concern that this could lead to sort of incremental competitive activity to spur volumes in light of elasticity. So I was maybe hoping you could dig into just what you’re seeing in the marketplace a bit more? And what would you would expect as some of the activations and tentpole events sort of kick in?
And would you, I guess, anticipate that Hersey returns to share growth either in 2Q or as we move through the year?
Kirk Tanner: Yes. Great question. Yes. I’d start with competition continues to be highly rational. There’s no change in the pricing environment. I just want to start with that. We have seen increased competitive innovation and merchandising from both mainstream and premium competitors. That’s what makes this category so attractive to consumers. It’s one of the reasons it’s so resilient. And so some of that happened a little earlier than we expected. We feel really good about our position as we exit spring resets in a net positive position across items and key channels and our spring and summer merchandising programs ramp up. Premium chocolate continues to be that segment that grows really well. But we are charging into that space aggressively.
And we have plans in the back half of this year to have some innovation, and we’ll continue to develop that. But overall, yes, we’re in a competitive environment. We feel good about where we’re going. We have momentum planned for the second half of the year that we feel really good about. But it is a rational pricing environment, Andrew.
Andrew Lazar: Great. That’s really helpful. And then you mentioned Easter sell-through was ahead of expectation. I guess it looks like maybe share was a bit weaker just in the past few weeks of data. I was just hoping you could sort of square those 2 things for us. And I guess how is Easter share sort of versus your expectations?
Kirk Tanner: Yes. I mean I look at the category in the first quarter. Overall, the category in confectionary was really resilient, growing high single digit. Overall, Easter was good for us. Category sales declined really due to the 2 fewer weeks versus last year, but our sell-through was really strong and outperformed our expectations. I’d say that’s the notable part, given that Hershey share — we’re a share leader at the season, and we typically index much higher. And so the 2 weeks was a big impact on the overall season. But we’re very happy with our performance and the sell-through that we saw those exceeded our expectation, and our share was also ahead of our expectations coming out of Easter.
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