Fewer consumer retail trips in the US and struggles in Latin America dented Hershey’s performance in Q1.
‘Below our expectations’
“The profile of Hershey’s results for the first quarter was slightly below our expectations,” said Hershey president and CEO John P. Bilbrey.
Group net sales rose 2.4%% to $1.87bn in the first quarter of 2014, while net income rose 4% to $252m. However, this fell short of Hershey’s full-year outlook of net sales growth of 5-7%.
“Given U.S. Brookside distribution gains in the year ago period, the timing of our more meaningful innovation later this year, and softness in Latin America, first quarter organic net sales growth was pressured.” said Bilbrey.
“Additionally, US retail trends varied and were impacted by lower consumer trips in the instant consumable channels and irregular purchasing patterns within the traditional food and mass channels.”
The company also experienced declines in Latin America due to Mexico’s new tax on foods high in saturated fat, sugar and salt and volume pressures in Brazil.
Reese’s plans and new products
Hershey continues to expect 5-7% net sales growth for 2014 and said growth would be driven by innovations such as York Minis in the US, Hershey’s Kisses Deluxe in China and a wider global distribution for Reese’s Peanut Butter Cups.
Hershey said the Reese’s brand would move to fast growing chocolate markets in Mexico, Brazil and China in the second half of the year.
The company is also planning to launch Ice Breakers Cool Blasts Chews and Brookside Crunchy Clusters in the US for the third quarter.
Bilbrey added that early indications suggested Easter sales were strong and that US consumer trends were beginning to normalize for non-seasonal candy.