The Hershey Company ( HSY ) saw its shares decline after reporting a disappointing second quarter, with adjusted earnings per share and sales falling short of expectations amid a challenging consumer environment.

The company reported adjusted earnings per share of $1.27 (down 36.8%), missing the street view of $1.43. Quarterly sales of $2.07 billion (down 16.7%) missed the analyst consensus estimate of $2.31 billion.

“Today’s operating environment remains dynamic with consumers pulling back on discretionary spending,” said Michele Buck, The Hershey Company ( HSY ) President and Chief Executive Officer.

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Both consolidated and organic, constant currency net sales experienced approximately a 9-point decline due to planned inventory reductions from the ERP system implementation and a 7-point decline from lower retailer inventory and seasonal shipment timing, with shifts expected to impact the second half of 2024.

“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,” Buck added. 

Adjusted gross margin was 43.2% in the second quarter, down 200 basis points year over year. Higher commodity costs and fixed cost deleverage more than offset price realization, productivity gains, and input cost timing favorability.

The company exited the quarter with cash and equivalents worth $467.058 million. It has long-term debt of $3.489 billion.

Dividend: The Hershey Company ( HSY ) announced quarterly dividends of $1.370 on the Common Stock and $1.245 on the Class B Common Stock.  The dividends are payable on September 16, 2024.

Outlook: For 2024, the full-year outlook has been adjusted. Net sales growth is now expected to be around 2%, down from the prior guidance of 2% to 3%.

Adjusted EPS growth is now anticipated to decrease slightly, revising the earlier projection of no change.

“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,” Buck added. 

Price Action: HSY shares are trading lower by 5.56% to $186.50 premarket at last check Thursday.

Image by Melissa from Pixabay

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