Hershey beat Wall Street expectations for quarterly sales and profit, benefiting from higher prices of its chocolates and candies at a time when demand has slowed.
Many packaged food companies, including Hershey, raised product prices to offset the impact of a surge in costs after supply chain disruptions and the Russia-Ukraine war pushed up prices of everything from transport to commodities like sugar.
But several rounds of price hikes in the last two years have now hit demand as customers, battling higher interest rates and grocery prices, have started to push back on pricier consumables like chocolates and candies.
Hershey's overall organic prices rose 9.8% in the third quarter, while organic volumes increased only 0.9%.
The 129-year-old company reaffirmed its annual profit forecast of $9.46 to $9.54 per share and of an 8% sales growth.
Its shares were down marginally in early trading amid broader declines.
RBC Capital Markets analyst Nik Modi said maintaining forecasts may seem conservative at first glance, but "it is prudent given our conservative view on the consumer backdrop and key selling days for Halloween ahead".
Halloween
Hershey expects major holidays like Halloween, when customers stock up on Reese's peanut butter cups and milk duds for trick-or-treat events, to boost sales.
CEO Michele Buck said consumers were buying Halloween candy closer to the holiday this year, unlike last year when inventory unavailability spurred earlier purchases.
Hershey executives also echoed views from PepsiCo and Coca-Cola regarding an impact on sales from the popularity of weight-loss drugs that could alter consumption patterns.
"We do not believe GLP-1's are having a material impact on our business at this point in time," Buck said in a post-earnings call.
Hershey's net sales rose 11% to $3.03 billion, beating analysts' expectations of $2.95 billion, according to LSEG data.
Its adjusted profit per share of $2.60 also topped estimates of $2.45.
