Earnings date: Thursday, July 30, 2026
Focus: Whether 2Q’s expected timing-driven sales softness gives way to the margin recovery and second-half growth management outlined at Investor Day.
Hershey enters 2Q with a largely understood setup: management explicitly warned in April that North America Confectionery organic sales would be slightly down in 2Q, principally because strong Easter sell-through pulled some spring/S’mores shipments into 1Q, with an additional smaller international pull-forward. Therefore, the headline sales result matters less than the underlying consumption, retail execution, gross-margin progression, and any change to the full-year outlook.
The core debate is shifting from whether Hershey can recover from the cocoa-driven margin pressure to how quickly it can turn improving commodity comparisons, pricing carryover, productivity, and portfolio execution into earnings growth—without damaging unit trends or category share.
Management’s April framework points to a favorable margin inflection: roughly +300 bps of year-over-year gross-margin improvement in 2Q, accelerating to more than +500 bps in the second half. That sets a relatively high bar for execution, but it also makes a clean 2Q margin print and reaffirmed/full-year-raised outlook potentially meaningful catalysts.
HSY closed at $184.41 on July 29, up about 8% from its July 15 low, though still roughly 7% below its late-May high. The stock has recovered into earnings, suggesting investors may require confirmation—not merely a timing-adjusted revenue explanation—to sustain momentum.
In 1Q, consolidated organic constant-currency sales grew 7.9%, driven by approximately 10 points of price and a 2-point volume/mix decline. North America Confectionery organic growth was 8.0%, but contained an estimated benefit from shipment timing.
Management said on the 1Q call that North America Confectionery organic sales should be slightly negative in 2Q, driven by:
Investor implication: The key is whether management can show that sell-through, market share, and velocity improved sequentially after the April timing distortion. A worse-than-expected top line accompanied by weak consumption or an adverse elasticity update would be more concerning than a modest organic-sales decline alone.
1Q adjusted gross margin declined 80 bps year over year to 40.4%, as higher commodity and tariff-related costs outweighed price, supply-chain productivity, and transformation savings. But that comparison should improve markedly as Hershey moves beyond prior-year cost pressure.
Management’s stated cadence:
The bridge is expected to include pricing realization, lower commodity-cost pressure as expensive cocoa comparisons ease, supply-chain productivity, and savings from the Advancing Agility & Automation program. The offset is purposeful reinvestment in advertising, consumer marketing, innovation, and tent-pole activations.
Investor implication: Gross margin is the most important financial line in the quarter. Strong delivery with an unchanged or higher full-year EPS outlook would validate the recovery model. A miss would raise questions about cocoa, tariffs, freight/packaging, mix, or the extent to which reinvestment must rise to protect volume.
Hershey reaffirmed the following full-year 2026 outlook in April:
| Metric | 2026 guidance |
|---|---|
| Net sales growth | 4%–5% |
| Organic constant-currency sales growth | 2.5%–3.5% |
| Adjusted EPS | $8.20–$8.52 |
| Adjusted EPS growth | 30%–35% |
| Agility & Automation savings | Approximately $100 million |
Management characterized its approach as cautious given evolving macro risks and said the midyear report would offer better visibility on elasticities, new price-pack architecture, and the broader demand environment. That puts particular attention on whether it reaffirms, narrows, or raises guidance.
Hershey’s 1Q revenue growth was principally price-led. North America Confectionery recorded roughly 12 points of price against a 4-point volume decline. Elasticities were running better than management’s planning assumptions, but the company remained deliberately cautious because new price-pack architecture was still reaching shelves.
The 2Q report should clarify whether:
Management noted that it exited spring resets in a net positive position across items and innovation in key channels. The company has also emphasized stand-up bags, improved shelf architecture, broader distribution for top SKUs, and tent-pole merchandising as drivers of second-half unit and occasion growth.
What would be constructive: Stable-to-improving volume trends, resilient retail takeaway, and confidence that new shelf sets and merchandising will support share in the second half.
What would be negative: Evidence that competitors are using lower cocoa costs to become more promotional, leading to worsening price elasticity or sustained share loss.
Management is leaning into a broader “One Hershey” commercial model, combining confection and salty snacks around more frequent cultural and consumption occasions. It expects tent-pole activity to contribute roughly one point of growth this year.
Near-term execution themes include:
The earnings call should offer the first meaningful update on how summer activations are landing at retail and whether the improved shelf/reset position is translating into shipment and consumption momentum.
Why it matters: Hershey’s medium-term strategy relies on returning to a more balanced model of price plus unit/occasion growth. The second half is the first major test of that transition.
Cocoa’s decline from its extreme levels has improved the medium-term margin narrative, but the benefit to reported earnings is governed by Hershey’s hedge book, inventory timing, and the timing of when high-cost cocoa rolls off.
At Investor Day and on the 1Q call, management’s message was:
The key question for 2Q is not whether spot cocoa has fallen, but whether management’s expected 2H margin recovery remains intact and whether lower costs create greater 2027 upside.
Other costs deserve attention as well. Management previously said oil exposure was limited directly, though packaging and freight could be indirect risks if energy costs remain elevated for a prolonged period.
North America Salty Snacks grew 26% in 1Q, including about 20 points from the LesserEvil acquisition. Organic growth was 5.6%, supported by more than five points of volume growth. Yet segment profit declined 18%, and margin fell 530 bps to 9.8%, due to a temporary product withdrawal, higher logistics costs associated with a delayed distribution-center opening, and heavier marketing investment.
Management described these as temporary issues and expects Salty segment operating income to grow double digits for the full year.
2Q questions:
Investor implication: A clear margin rebound in Salty would strengthen the credibility of Hershey’s ambition to build a scaled, higher-margin #2 salty-snacking platform over time.
International sales rose 16.1% in 1Q, or 9.3% organically in constant currency, but volume declined approximately 2%, and segment margin fell 680 bps to 5.8% amid commodity, manufacturing, and advertising costs.
Management continues to see strategic potential in Brazil, Mexico, the U.K., and Europe—particularly through Reese’s expansion—but the current earnings contribution remains pressured.
For 2Q, investors should assess whether:
This quarter is less about beating a single sales number and more about validating the shape of the recovery. Investors should expect a mechanically soft 2Q top line in North America Confectionery due to shipment timing. The more decision-useful measures are:
A clean print would support the view that 2026 is a margin-recovery year and that the company can transition toward its stated 2027 earnings recovery and longer-term 2%–4% organic growth / 6%–8% EPS growth framework. Conversely, weak demand indicators or a margin-cadence miss would challenge the premise that Hershey can retain pricing while restoring volumes and reinvesting behind its brands.