Hershey Slumps Most Since 2016 as Profitability Gets Squeezed

(Bloomberg) -- Hershey Co. tumbled the most in more than two years after the candy company’s third-quarter results and outlook disappointed investors.

• Revenue amounted to $2.08 billion, the company reported Thursday, compared with the average $2.09 billion projection.

Key Insights

• Hershey’s margins shrank in the quarter as it faced higher freight and shipping costs. Its adjusted gross margin dropped to 44 percent from 45.3 percent a year earlier.
• The candy maker has been adding what Chief Executive Officer Michele Buck on Thursday called higher-margin products, with its recent acquisition of Pirate’s Booty maker B&G Foods Inc. for $420 million.
• That followed its purchase of the maker of SkinnyPop popcorn in a push to expand its snacking portfolio. The company already offered snack mixes with chocolate, along with cookie shortbread bars.
• Buck said in September that Hershey may also look to offload brands that don’t have room for profitable growth.

Market Reaction

• The shares fell as much as 8.3 percent to $99.15 Thursday in New York, the biggest intraday slide since August 2016. They had dropped 4.7 percent this year through Wednesday’s close.
• For more details on the earnings, click here.

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