09:33 AM EDT, 08/01/2024 (MT Newswires) -- Hershey's (HSY) second-quarter results fell more than Wall Street's expectations as consumers pulled back on discretionary spending, prompting the confectionery company to cut its full-year outlook.

Adjusted earnings came in at $1.27 per share for the June quarter, down from $2.01 the year before and missing the Capital IQ-polled consensus of $1.45. Sales fell 17% year over year to $2.07 billion, trailing the Street's view for $2.32 billion. The company saw an 18% drop in organic volume and mix, while pricing gained 1%.

"Today's operating environment remains dynamic with consumers pulling back on discretionary spending," Chief Executive Michele Buck said in a statement. "Our business has been impacted by these trends, but we are pleased to see continued growth in the confection category and momentum building in our salty snacks portfolio."

North America confectionery sales slid 21% year over year to $1.58 billion, in part due to the planned depletion of retailer inventory built in the first quarter ahead of the implementation of the company's enterprise resource planning system. North America salty snacks revenue rose 6.4% to $289.9 million, boosted by volume growth.

International sales fell 8.9% from last year to $204.8 million.

Gross margin contracted by 530 basis points to 40.2% amid derivative mark-to-market losses and commodity costs. Selling, marketing and administrative expenses fell to nearly $541 million from $571.8 million last year.

Hershey now anticipates adjusted EPS in 2024 will be "down slightly," or in a range of $9.49 to $9.59, compared with its previous forecast for the bottom line to be flat at last year's $9.59 figure. Sales are projected to grow about 2% year over year versus the prior guidance for a 2% to 3% gain. The current consensus on Capital IQ is for normalized EPS of $9.57 and revenue of $11.43 billion.

"Our second-half innovation is expected to bring energy to our categories, and we are confident our evolving strategies will meet consumers' changing needs and drive long-term success," according to Buck.

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