Hershey (NYSE:HSY) executives fielded questions from analysts following the company’s first-quarter 2026 results, outlining management’s views on competitive conditions in North American confectionery, demand trends amid macro uncertainty, margin expectations, and growth initiatives across innovation, seasons, and snacks.
Competition and market share: “Highly rational” pricing, more innovation activity
Addressing questions about North America confectionery and comments in the quarter’s press release regarding lower year-over-year CMG market share, President and CEO Kirk Tanner said the competitive landscape remains “highly rational,” emphasizing that the pricing environment has not changed.
Tanner also pointed to premium chocolate as a faster-growing segment, saying Hershey is moving more aggressively into that space and expects to have additional innovation plans in the back half of the year.
Easter results: sell-through exceeded expectations despite calendar headwind
Tanner said confectionery consumption was resilient in the first quarter, describing the category as growing “high single digits as expected.” He noted that overall Easter category sales declined due to “two fewer weeks versus last year,” but said Hershey’s sell-through was “really strong and outperformed our expectations.”
While acknowledging that Hershey is typically a share leader during the season, Tanner said the shorter season meaningfully affected the overall results. Still, he said Hershey’s share coming out of Easter was “ahead of our expectations.”
Macro, SNAP, and GLP-1: tracking within expectations
Analysts pressed management on whether the macro environment has become more challenging since the company’s initial outlook. Tanner said consumer behavior “remained really steady throughout the quarter,” with shoppers making “thoughtful choices.”
On SNAP-related changes, Tanner said the impact in the first quarter was “mild,” since waivers were limited to five states. He added that in those states, the effect on both the category and Hershey’s business aligned with company estimates, which he said increases confidence in the full-year outlook. Tanner also noted “considerable consumer confusion” where implemented and said the company expects the headwind to increase over the course of the year, planning to adjust portfolio and pack types accordingly.
Responding to questions about GLP-1 adoption and health-and-wellness trends, Tanner said consumer research indicates the confection category is “relatively insulated compared to other food categories,” with GLP-1 users continuing to enjoy confection “in smaller portions.” He said the company’s outlook contemplates accelerated adoption rates, affordability, and new formats, and that it continues to monitor calorie reduction and other behavior changes.
Tanner also discussed convenience-store trends in the context of higher gas prices, saying the company saw “very little impact” early in the first quarter because it was a later event. He said Hershey’s confection business continues to perform in line with expectations, including in immediate consumption. He added that if high gas prices persist, the impact could grow, but noted that higher prices can also increase store visit frequency.
Elasticities, Price Pack Architecture, and Q2 timing dynamics
On price elasticity, Senior Vice President and CFO Steve Voskuil said the company continues to model elasticity at roughly 0.8, adding that results have been “better than what we’ve modeled” and the company expects that to continue, while monitoring the impact of Price Pack Architecture changes currently hitting shelves.
Voskuil also addressed expectations for the second quarter, confirming that confection organic sales are expected to be “slightly down” due to timing. He attributed the shift primarily to strong Easter sell-through that pulled forward shipments of spring programming, including s’mores activity, as well as “a little bit of pull forward internationally” as some customers acted to get ahead of potential Middle East disruptions.
Tanner said that after the April overlap from Easter, he expects momentum to pick up in May and June, adding that “overall consumption trends are staying consistent” when excluding one-time timing items.
Margins, marketing reinvestment, and cocoa outlook
Voskuil provided guidance on margin cadence, saying the company expects gross margins in the second quarter to increase by “nearly 300 basis points” versus the prior-year period, with the back half expected to improve by “greater than 500 basis points.” He said the company has the year “pretty well planned out” and has good visibility to the cadence.
Discussing the relationship between gross margin and operating margin, Voskuil said they may diverge due to planned increases in media investment, which he said will pick up in the second quarter and continue into the back half. He added that the company’s full-year expectation is unchanged, including a double-digit increase in marketing and advertising. Voskuil said some spending shifted from Q1 to Q2 due to delayed non-working media development and additional tuning toward spring activations.
On input costs such as packaging and freight, Voskuil said the company is “really not seeing a big impact” so far and described Hershey as having good visibility through 2026, and in some cases beyond, through its hedging program.
Voskuil also shared Hershey’s view on cocoa. He said the company remains cautious long term and believes cocoa could stay above lower historical levels. In the near term, he said the company anticipates a larger surplus in 2025 and 2026 due to factors including supply chain diversification, strong crops, declining demand, and expansion in new origins. If cocoa prices fall, Voskuil said Hershey has the ability to participate in that downside “particularly in 2027 and beyond,” which could create upside opportunities to the company’s 2027 and 2028 outlook.
Additional themes from the Q&A included:
- Seasons and “tentpoles”: Tanner said the company has a strong second-half seasons plan and expects tentpoles to deliver “a full point of growth,” citing items such as “Americana” and the upcoming Hershey movie, along with retailer support and perimeter execution.
- Spring resets and merchandising: Tanner said Hershey is in a positive position on facings and SKUs across major channels, and highlighted a shift toward stand-up bags versus lie-flat bags to improve visibility and shopability.
- Snacks performance: Tanner said salty snacks results were pressured by a planned reduction in private label, while core salty brands were up “nearly 10%.” Voskuil said discrete logistics costs tied to a delayed D.C. opening and a voluntary withdrawal weighed on profitability, but those issues are behind the company; he said Hershey expects salty snacks operating income to grow double digits for the year.
- International growth: Tanner said Reese’s continues to thrive in the U.K. and other European countries, with a mix of imports and local manufacturing, and the company will consider insourcing once it scales further. He also said the Reese’s playbook is working in markets such as Brazil and Mexico.
- Innovation contribution: Tanner said innovation represents a “high single-digit” percent of sales contribution and that future focus areas include premium, sweets, and better-for-you offerings, alongside continued innovation in salty snacks.
Management reiterated that it is maintaining its outlook, with Voskuil describing the approach as prudent given evolving macro conditions and the ongoing rollout of Price Pack Architecture. He said the company expects to have more visibility by midyear to reassess conditions and performance drivers.
About Hershey (NYSE:HSY)
The Hershey Company (NYSE: HSY) is a leading North American chocolatier and snack manufacturer headquartered in Hershey, Pennsylvania. The company develops, produces and markets a wide range of confectionery and snack products for retail, foodservice and international customers. Hershey’s business spans manufacturing, branded product marketing, packaging and distribution across grocery, convenience, mass merchant and e-commerce channels.
Hershey’s product portfolio centers on chocolate and sugar confectionery, including core brands such as Hershey’s, Reese’s, Hershey’s Kisses and Twizzlers, alongside non-chocolate snacks and confectionery brands.
