Hershey slashed its yearly profit and sales guidance on Thursday after reporting a 17% drop in second-quarter sales.
Shares plunged 4.5% early Thursday morning before jumping back up 5%.
The Pennsylvania-based candy company – with a market capitalization of $38.83 billion – struggled with a consumer pullback on spending amid sticky inflation, like many others in the food and snack industries.
Hershey — which owns brands including Reese’s and KitKit — had been a rarity during the economic slowdown, holding onto and even growing its market share.
But demand seems to have taken a downturn.
“Today’s operating environment remains dynamic with consumers pulling back on discretionary spending,” CEO Michele Buck said in a statement.
Second-quarter net sales fell to $2.07 billion, below analysts’ expectations of $2.31 billion, according to LSEG data.
Net sales in the North America segment — Hershey’s largest market, which typically accounts for 80% of its revenue — fell to $1.58 billion, down from $1.99 billion in the same period last year.
Adjusted earnings per share fell to $1.27 a share, down 36.8% from the same period last year and below analysts’ estimates of $1.43.
Organic volume plunged 18% and gross margin dipped to 40.2%, down from 45.5% last year.
The candy company lowered its full year sales and earnings guidance.
Hershey said it expects sales growth of 2%, compared to its previous guidance of 2% to 3%.
The company previously expected no change in adjusted earnings per share, but it now expects a slight decline.
“Our business has been impacted by these trends,” Buck said, referencing cautious consumer spending, “but we are pleased to see continued growth in the confection category and momentum building in our Salty Snacks portfolio.”
Hershey’s salty snack collection includes brands like Dot’s Homestyle Pretzels, Pirate’s Booty and SkinnyPop.
While the North America Salty Snacks segment is not Hershey’s largest, it did see growth in the second quarter.
Salty snack net sales were $289.9 million, up 6.4% from last year, which the company attributed to volume growth.
The salty snack segment income was $52.2 million, up 19.2% from the same period last year.
Meanwhile, the dominating North America Confectionery segment net sales decreased 20.7% from the same period last year.
The segment reported income of $464.5 million, down 29.3% from the same period last year.