Hershey Co. (HSY) to Cut 300 Jobs, Lowers Guidance

Shares of the Hershey Company (HSY) were trading down -2.76 or -2.99 percent to $89.50 per share in Friday's premarket after the company announced it would cut 300 jobs and downwardly revised its full year guidance. Hershey Company stock closed at $92.26, down -0.21 or -0.23 percent in Thursday's regular trading session.



Founded by Milton S. Hershey in 1894, Hershey, Pennsylvania based Hershey Company is one of the oldest chocolate manufacturers in the United States.
In addition to making its famous chocolate bars, Hershey products include: Almond Joy, Mounds, Kit Kat, York Peppermint Patties, Cadbury Chocolates, Reese's Peanut Butter Cups and Hershey's Kisses to name only a few. In addition, the company licenses its products for items like ice cream and chocolate milk to companies such as Klondike, Breyers and Good Humor. The company employs 22,000 people and had $7.4 billion in annual revenues last year.

The Hershey Company announced early this morning that it would trim 300 jobs by the end of this year. As a result, the company said that it would book pretax charges of between $100 million and $120 million, or $0.29 to $0.35 per share in order to recover costs.

The company cited a slowdown in growth in China during the months of April and May which were below expectations as the main reason for the changes. Hershey's said increased competition in the chocolate market and changing consumer shopping behavior were the main reason for the job cuts and revised guidance.

Hershey's will now concentrate on increasing distribution in smaller outlets in China and promote its products and brands that produce the highest return. In addition to the revised guidance and job cuts, the company also made changes to its leadership structure in a new program.

Steven Schiller, currently the company's regional president for AEMEA will be named president of the company's China and Asia divisions. Patricia Little, the company's Chief Financial Officer will be made responsible for Mergers and Acquisitions as well as for corporate development.

Hershey's creation of a worldwide leadership team is expected to promote growth for the company in emerging international markets. The company expects to generate between $65 million and $75 million in pretax savings that will be subsequently be invested in building company brands.

The company's forecast for full year 2015 net sales is for an increase of +2.5 to +3.5 percent including benefits from divestitures and acquisitions of +1.5 percentage points, with a negative foreign exchange impact of -1.5 percentage points. Excluding unfavorable foreign exchange rates, full year net sales are expected to rise four to five percent versus a previous estimate of six to seven percent growth. For the full year, Hershey's expects gross margins to increase +135 to +145 basis points as solid gains in North America are partially offset by China trade destocking.

Due to the changes, full year reported earnings per share are expected to be $0.29 to $0.35 per diluted share with adjusted earnings of $4.10 to $4.18 including dilution from acquisitions and divestitures of $0.20 per share. The compares with a previous forecast of $4.30 to $4.38, analysts expected the company's guidance for the full year to show net earnings of $4.32.

Hershey stock is already down almost three percent in this morning's premarket. The stock was down 11 percent for the year through Thursday's close. With this morning's news, the stock could continue to be pressured in the near term.

Other News About HSY

The beloved Hershey's bar is getting an overhaul

Company will remove artificial flavors and replace them with "simple and easy to understand ingredients .

New Chocolate Tasting Experience to Be Unwrapped at Hershey's Chocolate World Attraction

Company will unveil new chocolate tasting experience at Hershey's Chocolate World in new digitally enhanced attraction.

Other Stocks in the News

Google Told to Expect Large Fines in EU Antitrust Probe

European Commission to set a fine level that will sufficiently deter Google from infringing on competitors.

CarMax's stock falls after sales miss expectations

Stock falls -4.00 or -2.0 percent in this morning's premarket after earnings announcement.

Published on Jun 19, 2015
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2016. Content published with author's permission.

Posted in ...