HSY · Q3 2025 Earnings

Cautious

Hershey Company (The)

Reported October 30, 2025

30-second summary

Hershey delivered Q3 net sales of $3.18B (+6.5% YoY) with organic constant-currency growth of 6.2%, all of it price (volume/mix flat). FY adjusted EPS was raised to $5.90-$6.00 (from $5.81-$6.00) and net sales growth quantified at ~3% (from "at least 2%"), with FY tariff expense cut $10M at both ends to $160-170M — though management modeled $200M of incremental tariff for 2026, so the forward-looking tariff picture is widening even as 2025 improves. The less-advertised story is that six prior FY operating line items — tax rate (both bases), interest expense, other expense, capex, and the $150M Agility & Automation savings target — were dropped from the guidance package, reducing visibility into how the EPS bridge is actually being built.

Headline numbers

EPS

Q3 FY2025

$1.30

Revenue

Q3 FY2025

$3.18B

+6.5% YoY

Gross margin

Q3 FY2025

32.6%

Operating margin

Q3 FY2025

13.7%

Key financials

Q3 FY2025

Metric	Q3 FY2025	YoY	Q2 FY2025	QoQ
Revenue	$3.18B	+6.5%	$2.61B	+21.7%
EPS	$1.30	—	$1.21	+7.4%
Gross margin	32.6%	—	30.5%	+210bps
Operating margin	13.7%	—	7.4%	+630bps

Guidance

Company raised full-year net sales, reported EPS, and adjusted EPS guidance while lowering tariff cost outlook; multiple forward-looking operational metrics withdrawn.

Guidance is issued for both next quarter and the full year. Both may appear below.

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
Reported EPS – Diluted	FY2025	$5.36 - $5.69	$5.48 - $5.72	+$0.12 - $0.03 at low/high end	Raised
Adjusted EPS – Diluted	FY2025	$5.81 - $6.00	$5.90 - $6.00	+$0.09 at low end; reaffirmed at high end	Raised
Net sales growth	FY2025	Up at least 2%	Up at least 2% ~3%	Quantified to ~3% midpoint (prior was unquantified 'at least 2%')	Raised
Reported earnings per share growth	FY2025	Down ~50%	Down 48% to 50%	Narrowed range, low end raised from ~50% to -48% (implied -50% to -48%)	Raised
Adjusted earnings per share growth	FY2025	Down 36% to 38%	Down 36% to 37%	-1pp at high end (from -38% to -37%)	Raised
Tariff expense	FY2025	approximately $170 to $180 million	$160 million to $170 million	-$10M at both low and high end	Lowered
Reported effective tax rate	FY2025	approximately 27%	Withdrawn — no replacement	—	Withdrawn
Adjusted effective tax rate	FY2025	approximately 24%	Withdrawn — no replacement	—	Withdrawn
Other expense	FY2025	approximately $75 million to $80 million	Withdrawn — no replacement	—	Withdrawn
Interest expense	FY2025	approximately $200 million	Withdrawn — no replacement	—	Withdrawn
Capital expenditures	FY2025	approximately $425 million to $450 million	Withdrawn — no replacement	—	Withdrawn
Advancing Agility & Automation Initiative savings	FY2025	approximately $150 million	Withdrawn — no replacement	—	Withdrawn

Segment performance

Q3 FY2025

Segment	Q3 FY2025	YoY
North America Confectionery	$2.616B	+5.6%
North America Salty Snacks	$0.321B	+10.0%
International	$0.245B	+12.1%

Platform metrics

Q3 FY2025

Segment	Q3 FY2025
Organic Constant Currency Net Sales Growth	6.2%
Organic Price Realization	6%
Organic Volume/Mix	flat
U.S. Candy, Mint & Gum Retail Takeaway (MULO+)	+5.4%
U.S. Salty Snacks Retail Takeaway (MULO+)	+14.2%

Profitability

Q3 FY2025

Segment	Q3 FY2025
Non-GAAP Gross Margin	31.8%
Non-GAAP Operating Margin	13.3%
North America Confectionery Segment Margin	21.8%

Management tone

Q2 anchor: "tariff layer on cocoa, but 2026 on-algorithm" → Q3 anchor: "raise the print, defer the 2026 math."

Three multi-quarter shifts stand out from the Q&A.

From "$10-12 Cagney guide with tariffs as swing factor" (Q2) to "$200M incremental tariff modeled for 2026, multiple paths to double-digit EPS still on the table" (Q3). Asked by Megan Klatt from Morgan Stanley whether the double-digit EPS scenario from last quarter still holds, Steve Voskuil effectively reaffirmed it but with a heavier explicit tariff burden ($200M incremental in 2026) and qualifications around cocoa, consumer, and elasticity. The shift is from a clean bridge to a wider distribution of outcomes — same upside framing, more variables.

From "above-algorithm potential" (Q2) to "long-term algorithm with some EPS upside" (Q3). Kirk's framing of 2026 was notably more measured than Q2's language. Combined with the tax rate moving up on both reported and adjusted bases — a real EPS headwind even as cocoa moderates marginally — the verbal walk-back is consistent with management creating optionality on the 2026 setup.

From "Easter 2026 first fully repriced season, ~1:1 elasticity assumption" (Q2) to "early data shows no concerning deviations from -1% elasticity; everyday CMG up double digits last four weeks" (Q3). This is the genuinely constructive shift. The biggest risk in last quarter's setup was that the mid-teens 2026 pricing would crater volume. Early read says it isn't. Voskuil's response to Max Gumport's elasticity question was the most confident exchange on the call.

Q&A highlights

Andrew Lazar · Barclays

How does Hershey balance moderating cocoa costs, lower tariff estimates, and accelerating momentum when guiding to flat EPS growth in 2026, especially given market expectations for double-digit growth?

Kirk emphasized defining success as growing at or ahead of category while building margin back to full potential over multiple years. 2026 goal is returning to long-term algorithm (2-4% revenue growth, some EPS upside) while investing in brands and competing at category level. Early elasticity data shows no concerning deviations from -1% assumption.

Long-term algorithm: 2-4% revenue growthElasticity assumption: -1% for 2026Everyday CMG up double digits last four weeksCategory growth historically ~2%

Max Gumport · BNP Paribas

Provided early elasticity data on everyday business showing double-digit growth; questioned whether competitor pricing cadence differences mean the market is more rational than feared.

No concerns on elasticity from early data; everyday CMG up double digits in last four weeks. Competitive environment rational and well-managed; companies moving at different cadences but not in lockstep historically. Price gaps exist but not concerning in aggregate.

Everyday CMG up double digits last four weeksCategory very resilient and rationalCompetitors taking prices at different cadencesPricing execution more strategic and precise than historically

David Palmer · Evercore ISI

Sought color on Halloween's disappointment level and whether consumer/competitive dynamics differ from historical Friday effects; asked about cocoa outlook and retailer sympathy with pricing given input inflation.

Halloween had slow start; Friday timing means ~1/3 of sales in final week, so still expected to be somewhat soft. Interplay between Halloween and core/everyday business offsetting. Cocoa 70% higher than 2023; company working hand-in-hand with customers through deliberate pricing approach.

Halloween expected to be somewhat soft despite Friday dynamics~1/3 of Halloween sales in final week when falls on FridayCocoa 70% higher than 2023 baselineCore business near 5% growth in Q3 without Reese's Oreo

Leah Jordan · Goldman Sachs

Asked about innovation pipeline for 2026, balancing core vs. innovation growth, and increased brand investments and competitive environment observations.

Reese's Oreo a top category growth driver; core business growing ~5% without it. Robust innovation pipeline for 2026-2027. Balanced approach critical—cannot rely solely on innovation. Brand investments in digital marketing, holiday campaigns, and innovation have driven momentum and are on-strategy.

Core business Q3 growth ~5% without Reese's OreoRobust innovation pipeline for 2026 and 2027Reese's Oreo top innovation driver category-wideBrand investments in digital marketing and tentpole events

Megan Klatt · Morgan Stanley

Questioned whether 'multiple paths to double-digit EPS' commentary from last quarter has changed given cocoa moderation and tariff developments; asked about 2026 puts and takes.

Above-algorithm EPS performance still on table. Cocoa moderating (feeling 'marginally better'); layering in hedges per program. Tariffs: $200M incremental modeled; blanket exemption unlikely but trade deal acceleration on commodities/cocoa in third annex provides optimism. Consumer demand, innovation, elasticity, cocoa, tariffs key variables. Overall, not materially different from last quarter.

$200 million incremental tariff headwind modeled for 2026Cocoa inflation moderating vs. last quarterHedging program includes downside participationAbove-algorithm EPS growth still possible

Answers to last quarter's watch list

Q3 sales normalization — Reported net sales +6.5% YoY, organic +6.2% — comfortably in mid-single-digit territory, confirming Q2's +26% was almost entirely the ERP destock lap and Easter timing. Underlying demand is healthy: U.S. CMG retail takeaway +5.4%, shipments tracking consumption.

Resolved positively

Gross margin trajectory — GAAP gross margin recovered to 32.6% (from 30.5% in Q2); non-GAAP at 31.8%. Did not deteriorate as cocoa hedges flowed through; well clear of the sub-29% concern threshold.

Resolved positively

Elasticity read on Easter 2026 pricing — Too early for Easter-specific data, but everyday CMG up double digits in the last four weeks and organic volume/mix flat against +6% price implies elasticity is tracking the -1% assumption. Management explicitly cited "no concerning deviations" in Q&A.

Continue monitoring

Cocoa grind data — Not directly addressed on the print. Management commentary was that cocoa is "marginally better" and 70% above 2023 baseline; hedging program continues. No grind-level disclosure.

Continue monitoring

Tariff resolution — FY tariff guide cut from $170-180M to $160-170M (-$10M at both ends). For 2026, management modeled $200M of incremental tariff — a notable disclosure, suggesting the tariff layer is widening into next year even as 2025 improves. Status: Resolved negatively (for 2026 setup; positive for 2025)

Kirk's first public commentary as CEO — Kirk endorsed the pricing-led recovery thesis and framed 2026 as a return to the long-term 2-4% revenue / "some EPS upside" algorithm — more measured than Q2's "above-algorithm potential" language. No incremental cost actions announced beyond the reaffirmed $150M Agility & Automation savings target. Status: Resolved negatively (more cautious framing than Q2 set up)

What to watch into next quarter

Halloween read-through in Q4 sales: management already flagged "somewhat soft." Watch whether North America Confectionery Q4 decelerates meaningfully below the Q3 +5.6% pace; sub-3% would suggest Halloween softness was worse than embedded.

Volume/mix sign change in Q4: Q3 was +6% price / flat volume — best-case elasticity outcome. Watch whether volume/mix turns negative as the next wave of pricing flows through. A -2% or worse volume print would force a re-rating of the -1% elasticity assumption underpinning 2026.

2026 EPS framework specificity at Q4: Kirk's Q3 language was "long-term algorithm with some EPS upside." A January formal 2026 guide that lands below mid-single-digit EPS growth — or skips quantification entirely — would walk back Q2's "multiple paths to double-digit EPS" framing.

Tariff escalation into 2026: $200M incremental modeled for 2026. Any deterioration in trade negotiations on cocoa or any expansion of tariff scope hits the bridge dollar-for-dollar.

Tax rate trajectory: both reported (~30%) and adjusted (~26%) rates stepped up materially versus Q2's guide, driven by lower renewable energy tax credits. Watch whether this is a one-year reset or a structural step-up that pressures the 2026 EPS bridge.

Gross margin sustainability above 30%: Q3 GAAP at 32.6%, non-GAAP at 31.8%. Watch whether Q4 holds this level or reverts toward Q2's 30.5% as the favorable Q3 mix unwinds.

Sources

Hershey Q3 2025 earnings press release, filed via SEC, October 30 2025: https://www.sec.gov/Archives/edgar/data/47111/000162828025047294/exhibit991_2025xq3.htm
Hershey Q3 2025 earnings call Q&A transcript (analyst attribution as cited)
Hershey Q2 2025 earnings press release (for prior-quarter guidance comparison): https://www.sec.gov/Archives/edgar/data/47111/000004711125000109/exhibit991_2025xq2.htm

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