Hershey Beats Profit Forecasts Despite Sales Dip, Fueled by Salty Snack Demand and Cost Controls

Hershey Co. has delivered better-than-expected quarterly earnings, underscoring the resilience of its North American snack segment despite ongoing pressures from commodity inflation and shifting trade policies. The confectionery giant, known for household staples like Reese’s and Hershey’s Kisses, reported a smaller-than-anticipated decline in Q1 sales and exceeded Wall Street’s profit estimates, driven in part by strong consumer appetite for salty snacks and disciplined cost management.

North America Snacks Steal the Spotlight

In a quarter that saw broader economic uncertainty and rising input costs, Hershey’s North American snacks business emerged as a bright spot. The segment—which includes fan favorites like Dot’s Pretzels and SkinnyPop popcorn—recorded a 4% increase in organic volume. This uptick came despite a deliberate 3% reduction in pricing, a strategic move to reinvigorate demand after several quarters of price hikes.

Industry analysts see this as a sign that consumers remain committed to snack purchases but are increasingly sensitive to pricing in a high-inflation environment. “Hershey’s price recalibration in the snacks category appears to have paid off,” said Dana Collins, a consumer goods analyst at LSEG. “It allowed the company to win back volume without significantly harming margins.”

Cost Discipline Helps Cushion Cocoa Surge

While snack volumes rose, Hershey has not been immune to external pressures. Global cocoa prices have skyrocketed in recent months, placing strain on companies across the chocolate supply chain. However, Hershey was able to protect its profitability through a combination of strategic pricing and reduced spending on advertising and marketing.

Across the company’s overall portfolio, Hershey implemented a modest 2% price increase. This, coupled with internal cost-cutting measures, helped to blunt the impact of manufacturing expenses and commodity inflation.

Earnings Top Estimates Despite 13.8% Sales Drop

For the quarter ended March 30, Hershey reported net sales of $2.81 billion, down 13.8% from the year-ago period. However, the figure still edged past analyst expectations of $2.79 billion, according to LSEG data. The decline in year-over-year revenue was attributed to lapping a strong prior-year quarter and changes in promotional cadence.

Adjusted earnings came in at $2.09 per share, beating consensus estimates of $1.95. The stronger-than-expected bottom line was a testament to Hershey’s pricing strategy and cost management efforts.

In premarket trading following the report, Hershey’s stock ticked up slightly, trading at $167.80.

Tariff Concerns Loom, But Guidance Holds Steady

Hershey has maintained its full-year guidance for both net sales and adjusted earnings, even as it braces for added challenges in the coming quarter. The company estimates that tariff-related costs—driven largely by U.S. import policies—will add $15 million to $20 million in expenses during Q2.

The impact of trade tensions, particularly stemming from the Trump administration’s aggressive tariff stance, continues to cast a shadow over multinational food companies. Mondelez International, a major competitor in the snack and confectionery space, also flagged similar risks despite its own better-than-expected quarterly performance.

“We remain vigilant about macroeconomic and policy developments that could affect input costs and supply chain dynamics,” said Michele Buck, CEO of Hershey, during the company’s earnings call. “However, our diversified portfolio and pricing flexibility provide resilience in volatile conditions.”

Category Resilience and Shifting Consumer Behavior

The U.S. snacking industry has demonstrated impressive resilience amid inflation and changing consumer habits. As budgets tighten, consumers are showing greater loyalty to affordable indulgences, especially single-serve or portion-controlled options like pretzels, popcorn, and peanut butter cups. Salty snacks, in particular, have become a comfort-food staple, driving growth in convenience and grocery channels.

Analysts note that Hershey’s ability to pivot toward this trend and reprice effectively gave it a competitive edge this quarter. “The company is proving adept at managing the delicate balance between price, volume, and consumer value perception,” said Collins.

Challenges Ahead: Cocoa, Freight, and Policy Uncertainty

Despite the Q1 beat, Hershey faces a host of challenges in the quarters ahead. Cocoa prices remain volatile due to weather disruptions in West Africa, which could continue to strain gross margins. Freight and labor costs also remain elevated, while advertising spend may need to rise again to support new product launches in the second half of the year.

Furthermore, policy uncertainty surrounding tariffs and international trade is adding to operational complexity. While Hershey has largely focused its snack strategy on North America, it still relies on global commodity markets and international suppliers for key ingredients and packaging.

A Balanced Outlook for 2025

Looking ahead, Hershey reiterated its guidance for fiscal 2025, projecting mid-single-digit growth in net sales and maintaining its adjusted EPS outlook. The company expressed confidence in its innovation pipeline, particularly within the salty snack segment and limited-edition seasonal offerings.

Investors and analysts alike will be watching closely to see how the company manages external cost pressures while continuing to build brand equity and market share.

Hershey’s first-quarter results offered a mixed but ultimately encouraging signal to investors. While total sales dipped, the company outperformed profit expectations thanks to a smart pricing reset in snacks and tighter control over operational expenses. With strong brand loyalty, steady snack demand, and disciplined execution, Hershey remains well-positioned to navigate a complex macroeconomic landscape. As it moves into the remainder of 2025, the key questions will revolve around its ability to weather commodity headwinds, manage advertising investment, and adapt to potential trade disruptions. For now, Hershey’s strategy appears to be bearing fruit—even if it’s salty rather than sweet.