Report date: Thursday, July 30, 2026
Conference call: 8:30 a.m. ET
Most recent close: $184.41 on July 29
Hershey’s second quarter is principally a margin-recovery and guidance event, not a clean test of reported revenue growth.
Management already warned that North America Confectionery organic sales would be slightly negative in Q2 because strong Easter sell-through pulled shipments and spring programming into Q1. Meanwhile, the prior-year comparison is unusually difficult: Q2 2025 organic sales grew 26.3% because of ERP-related inventory normalization, Easter timing and early Halloween shipments.
Investors should therefore look past the headline sales comparison and focus on four questions:
The most constructive outcome would be a relatively soft but well-explained top line, strong gross-margin delivery, stable consumption trends and at least a modest increase to full-year expectations. A weak margin result or evidence that confection volumes are deteriorating more than planned would be much harder to dismiss as timing.
| Metric | Q1 2026 result | Q2 setup / company expectation |
|---|---|---|
| Net sales | $3.10B, +10.6% | Difficult comparison; North America Confectionery organic sales expected slightly down |
| Organic sales | +7.9% | Timing reversals should pressure growth |
| Organic price | Approximately +10% | Pricing remains the main revenue support |
| Organic volume/mix | Approximately -2% | Watch for worsening elasticity as new price-pack architecture reaches shelves |
| Adjusted gross margin | 40.4%, -80 bps | Management expects nearly 300 bps of expansion |
| Adjusted operating margin | 22.1%, +40 bps | Gross-margin recovery partly reinvested in advertising |
| Adjusted EPS | $2.35, +12.4% | Prior-year Q2 adjusted EPS was $1.21 |
| FY adjusted EPS guidance | $8.20-$8.52, +30%-35% | Guidance decision is likely the largest stock catalyst |
| FY reported sales growth | +4%-5% | Includes roughly 150 bps from LesserEvil |
| FY organic growth | +2.5%-3.5% | Requires better momentum after the Q2 timing disruption |
Based on full-year guidance and the Q1 result, Hershey must generate approximately $9.06-$9.17 billion of sales over Q2-Q4, versus $8.89 billion in the same period last year. That equates to roughly 2%-3% reported growth over the final nine months, despite the expected Q2 slowdown.
For adjusted EPS, the company needs $5.85-$6.17 over Q2-Q4, compared with $4.22 last year. This implies approximately 39%-46% growth over the balance of 2026, making margin recovery—not revenue growth—the core earnings story.
Q1 benefited from:
Management explicitly said North America Confectionery organic sales should be slightly down in Q2. Consequently, a negative confection number should not automatically be interpreted as a demand miss.
The more informative disclosures will be:
In Q1, U.S. confection retail takeaway rose 8.1%, while flagship non-seasonal retail sales increased 11% for Hershey’s and 10% for Reese’s. However, Hershey lost category share because of heavier competitor innovation and merchandising.
A credible Q2 result should show that:
Red flag: Weak retail takeaway accompanied by deeper volume declines, rather than merely weak shipments, would suggest that elevated prices are beginning to impair underlying demand.
Hershey’s adjusted gross margin declined 80 basis points to 40.4% in Q1 as commodity and tariff costs exceeded the benefits of pricing and productivity. Management expects the inflection to begin in Q2, forecasting nearly 300 basis points of year-over-year expansion.
Against Q2 2025’s adjusted gross margin of 38.1%, that commentary points to a result near 41%.
The expected improvement should come from:
Hershey plans a double-digit increase in full-year advertising and consumer marketing. Some Q1 spending also moved into Q2, including media-development costs and spring activations.
Therefore, a strong gross-margin result may not flow through one-for-one to operating margin. That is acceptable if:
Red flag: Gross margin meaningfully below the roughly 41% company-indicated hurdle would call into question both the 2026 EPS guide and the speed of the 2027 profit recovery.
Hershey reaffirmed its outlook after a strong first quarter rather than raising it. Management cited continuing uncertainty around:
At the time, CFO Steven Voskuil said the company would be in a better position to reassess guidance at the midyear mark. That makes Q2 the natural point for a change.
Bullish: Management raises at least the lower end of adjusted EPS guidance, supported by favorable elasticity, productivity and margin recovery.
Neutral: Guidance is reaffirmed, but management says it is tracking toward the upper half and retains strong visibility into second-half margins.
Disappointing: Guidance is reaffirmed without confidence around the upper half, or the sales outlook is reduced because of volume, share or consumer pressure.
A full-year EPS raise may not be necessary for a positive reaction if Q2 margins are strong and management convincingly frames its caution as macro prudence. Conversely, an EPS beat generated mainly through tax or spending timing would carry less weight.
Management described confection pricing as rational in Q1, but acknowledged more competitive innovation and merchandising from both mainstream and premium players.
The report should clarify whether spring shelf resets improved Hershey’s position. Management previously highlighted:
The key distinction is between category resilience and Hershey-specific execution. The category can remain healthy while Hershey loses share to competitors with more effective innovation or merchandising.
Investors should listen for concrete evidence—distribution gains, velocity, shelf space and share trends—rather than broad statements about future second-half programming.
Q1 North America Salty Snacks sales grew 26%, including approximately 20 percentage points from LesserEvil. Organic growth was 5.6%, with branded retail takeaway excluding LesserEvil up 9.8%.
However, segment income declined 18%, and margin fell 530 basis points to 9.8% because of:
Management said the operational issues were behind it and reiterated expectations for double-digit full-year segment-income growth.
Q2 2025 provides a demanding profitability comparison: Salty Snacks generated a 21.1% segment margin. Investors should not expect Q1’s 9.8% margin to persist, but acquisition mix may prevent an immediate return to the prior-year level.
International Q1 organic sales rose 9.3%, but segment income fell nearly 47%, and margin contracted 680 basis points to 5.8%. Pricing and sales growth were outweighed by higher commodity and manufacturing costs plus increased advertising.
The division has also been more sensitive to pricing elasticity because of Hershey’s premium positioning and lower scale in some markets.
Watch for:
A second consecutive quarter of severe margin pressure would raise questions about whether International can contribute to the broader earnings-recovery thesis.
Spot cocoa prices have eased, but investors should not expect lower market prices to immediately transform Q2 costs. Hershey manages commodities through a multiyear hedging program, and management has said it is well covered for 2026.
The more important issue is whether lower cocoa prices create incremental upside in 2027 and beyond. At Investor Day, Hershey described 2027 as another year of outsized earnings recovery, with:
Management has also said its hedging structures provide some ability to participate in cocoa-price declines, particularly beginning in 2027.
Investors should ask:
HSY closed July 29 at $184.41, approximately:
The recent rebound suggests that some optimism around cocoa relief and earnings recovery may already be reflected in the shares. Nevertheless, the stock remains well below its February level, leaving room for a positive reaction if Hershey validates the expected margin inflection and offers constructive 2027 commentary.
The risk is that investors increasingly view lower cocoa as a future tailwind while Q2 reveals weaker current demand. In that scenario, near-term volume and market-share concerns could outweigh longer-term commodity optimism.
The cleanest test tomorrow is not whether reported sales beat an unusually distorted prior-year comparison. It is whether Hershey delivers the promised gross-margin inflection while demonstrating that its pricing has not caused a material deterioration in consumption or brand health.
A slightly negative confection organic-sales result can be consistent with the investment thesis. A material shortfall in adjusted gross margin cannot.
The most important combination for the shares would be:
Stable underlying demand + approximately 41% adjusted gross margin + confidence at the upper end of 2026 guidance + improving visibility into 2027.
If Hershey delivers those elements, the report should reinforce the view that 2026 is the first stage of a multiyear earnings recovery. If margin recovery disappoints or volume weakness spreads beyond timing effects, investors are likely to question how much of the anticipated 2027 rebound is already embedded in expectations.
Sources: Hershey earnings releases, SEC filings, Q1 2026 earnings-call transcript, March 2026 Investor Day transcript, company conference-call announcement, and stock-price data through July 29, 2026.