The company said it would fall short of meeting demand for the all-important Halloween and Christmas holiday seasons this year because of a scarcity of raw ingredients and difficulties in securing supplies.
Confectionery companies in the US rely heavily on the Halloween holiday in October. In Hershey’s case, it makes up approximately 10% of the company’s annual sales.
In its Second-Quarter 2022 Financial Results, released Thursday 28 July, the company announced net sales and earnings for the second quarter ended 3 July 2022, and raised its full-year financial outlook.
"Our business momentum continued in the second quarter, with double-digit sales growth in each of our segments resulting in strong earnings per share performance," said Michele Buck, Hershey Company President and Chief Executive Officer.
"These results reflect the strength and resilience of our categories, consumers' love for our brands, the investments we are making in our business, and the exceptional execution of our dedicated employees. We are raising our financial expectations for the year and investing more heavily in our brands, capabilities and people in the second half to continue this momentum into 2023."
Hershey's net sales rose over 19% to $2.37 billion in the quarter that ended 3 July, beating analysts' estimates of $2.22 billion, according to Reuters.
The 128-year-old company raised its 2022 adjusted profit per share growth forecast to 12% to 14%, from 10% to 12%. Hershey also said it now expects net sales to grow between 12% and 14%, compared with 10% to 12% estimated earlier.
Disruptions caused by the Russia-Ukraine war, and ongoing pandemic-induced global supply chain issues, have severely restricted supplies of cocoa, and other food ingredients and commodities.
During a call to media and analysts, Buck confirmed the company had found it more difficult to secure ingredients as a result of the war.
She revealed that disruption to Russian gas supplies to Europe was affecting Germany, where Hershey sources equipment and supplies.
Buck said Hershey has taken the “tough decision’’ to focus on everyday treats rather than trying to meet demand during seasonal periods like Halloween, but added that sales will still top last year.