Halloween trick-or-treating to soften Hershey's supply chain troubles

Hershey's chocolate bars are shown in this photo illustration in Encinitas, California January 29, 2015. REUTERS/Mike Blake/File Photo

Oct 27 (Reuters) - With costumed trick-or-treaters raring to go door to door this year after a pandemic-ridden 2020, candy maker Hershey Co (HSY.N) is expected to bump up its annual sales forecast even as supply chain bottlenecks plague the industry.

Hershey has about 70% of its manufacturing capacity in the United States, and that is expected to help it deliver its Kisses and Reese's in time for what is expected to be the biggest Halloween in terms of spending.

The period around the October holiday is Hershey's busiest time of the year, making up about 10% of the company's annual sales.

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Consumer spending on Halloween-related items is expected to reach an all-time high of $10.14 billion this year, according to a National Retail Federation (NRF) survey, compared with $8.05 billion spent in 2020.

"There's going to be a lot of pent-up demand this Halloween, because many people couldn't celebrate last year. Coupled with that, in general the consumer is in a very healthy position and vaccination rates have been growing," CFRA analyst Arun Sundaram said.


Growing global supply chain issues and worker shortages triggered by the pandemic have hurt packaged food makers. The companies are also taking a hit to their margins due to soaring prices of commodities such as sugar, cocoa beans, wheat and edible oils.

"Hershey would have an easier time navigating the (supply chain) crisis given that the company has less complexities in its supply chain compared to other packaged food companies who have a more global presence," Sundaram added.

NRF data suggests more U.S. consumers are ready to celebrate Halloween this year after a year of limited trick-or-treating.


** Analysts forecast annual revenue of $8.82 billion for Hershey, which will report quarterly results before markets open on Thursday

** Full-year adjusted profit is estimated to be $6.91 per share

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** The current average analyst rating for Hershey is "hold", with a median price target of $185.00

** The company's shares have risen nearly 20% this year

Reporting by Mehr Bedi in Bengaluru; Editing by Sweta Singh and Shounak Dasgupta

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