Q2 2024 Hershey Co Earnings Call Transcript
Key Points
- The Hershey Co (HSY) has strong visibility into seasonal orders, with most orders already in hand, indicating confidence in upcoming seasonal performance.
- The company is taking a measured approach to pricing, aiming for a 6-7% net price realization to offset historic cocoa prices.
- Significant incremental innovation is planned for the second half of the year, including the Shaq launch and new product forms.
- The salty snacks segment, particularly Dot's and SkinnyPop, is showing strong momentum and is expected to continue growing.
- The company has robust internal processes for determining pricing strategies, ensuring a balanced approach to passing on costs to consumers.
- There was a 6% impact from lower retail inventory and a 2-3% impact from the Halloween shift, raising concerns about underlying demand.
- Market share trends in core chocolate have been weaker than expected, particularly in everyday items.
- The company experienced a reduction in key retailer merchandising, which has impacted performance and will need to be lapped in the second half.
- Incentive compensation has been adjusted down due to lower-than-expected performance, indicating some internal challenges.
- Gross margins are expected to decline by 200 basis points for the full year, with input cost timing favorability being a temporary benefit.
Greetings, and welcome to The Hershey Company's second quarter 2024 earnings question-and-answer session. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Anoori Naughton, Senior Director of Investor Relations. Thank you, Ms. Naughton, you may begin.
Good morning, everyone. Thank you for joining us today for The Hershey Company's second quarter 2024 earnings Q&A session. I hope everyone has had the chance to read our press release and listen to our prerecorded management remarks, both of which are available on our website. In addition, we have posted a transcript of the pre-recorded remarks. At the conclusion of today's live Q&A session, we will also post a transcript and audio replay of this call.
Please note that during today's Q&A session, we may make forward-looking statements that are subject to various risks and uncertainties. These statements are including expectations and assumptions regarding the
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