Candy maker Hershey raises sales outlook ahead of holiday season

An employee shows a Hershey's chocolate bar made in USA in the "American lifestyle" store in Berlin
An employee shows a Hershey's chocolate bar made in USA in the "American lifestyle" store in Berlin, Germany, August 13, 2018. REUTERS/Fabrizio Bensch

Nov 4 (Reuters) - Hershey Co raised its annual sales and profit forecasts on Friday, signaling strong Halloween candy demand that it expects to continue into the holiday season despite higher selling prices.

Halloween is Hershey's busiest time of the year, making up about 10% of its annual revenue, with sales benefiting for months in advance as retailers place early orders to stock up on Twizzlers, Jolly Ranchers and Kit Kat bars.

After two years of pandemic restrictions on trick-or-treating, candy demand during this year's holiday is expected to have risen sharply, with the National Retail Federation (NRF) anticipating record high sales of $3.1 billion.

Hershey estimated its Halloween retail sales rose by a high-single-digit percentage, even as ingredient shortages and supply constraints curbed growth.

"We anticipate this category momentum to continue into the Holiday season, and product is already out in stores and selling well," CEO Michele Buck said.

Buck added that further price increases and new manufacturing lines were expected to boost Hershey's sales next year, but demand would likely slow as consumers become more price sensitive.

The Reese's Peanut Butter Cup maker said its overall average selling prices increased by 7.7% in the third quarter to Oct. 2, while sales volumes rose 4.1%.

It reported adjusted earnings of $2.17 per share on revenue of $2.73 billion in the same period.

Analysts had expected a profit of $2.10 per share on revenue of $2.62 billion, Refinitiv data showed.

Hershey raised its 2022 net sales growth forecast to 14% to 15%, from 12% to 14%. It expects adjusted profit per share to grow by 14% to 15%, against the prior forecast of 12% to 14%.

Other packaged food makers, including Cadbury maker Mondelez International (MDLZ.O) and Kellogg Co (K.N), have also raised their sales forecasts in recent days as they see little impact to demand from price increases.

Reporting by Granth Vanaik and Uday Sampath in Bengaluru; editing by Milla Nissi

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Uday has been reporting on U.S. retail and consumer companies for over five years and has written multiple analysis pieces on the space, including about a flurry of mergers in the toy industry, how an aging population benefited the golf industry and how weak sales from retailers spooked global markets. Uday has a bachelor's degree in commerce from Christ University Bangalore, India.