A Hershey's chocolate bar is shown in this photo illustration in Encinitas, California January 29, 2015. Chocolate maker Hershey Co reported a lower-than-expected quarterly revenue as demand for bakery and meat snacks hurt chocolate sales.
A Hershey's chocolate bar is shown in this photo illustration in Encinitas, California January 29, 2015. Chocolate maker Hershey Co reported a lower-than-expected quarterly revenue as demand for bakery and meat snacks hurt chocolate sales. Reuters/Mike Blake

Hershey has published its sales and earnings for the third quarter, showing lower-than-expected results due to weak demand for mint, gum and candy. Immediately after the results, the shares plunged by 5 percent.

The records of the report have been lower than Wall Street’s forecasts. According to Reuters, this fall could be attributed to the strong dollar. In addition, international sales plummeted 15 percent as compared to the previous year. There has been a shift in consumer’s preference to other healthier foods and this has prompted the company to narrow down its marketing efforts on minty or sugary products.

Hersey’s reported that the consolidated net sales were US$1,960.8 million ( $2759.55 million) whereas it was US$1,961.05 million (AU$2760.68 million) for the third quarter of 2014. In case of reported net income, this time it has been $0.99 per share-diluted as compared to $1.41 per share-diluted in 2014.

However, officials at the company remain positive of the future outcome. “In the third quarter Hershey’s efforts were focused on ensuring successful execution of our seasonal plans, which are on track and should result in good Halloween and Holiday seasons,” said John P. Bilbrey, Chairman, President and Chief Executive Officer, The Hershey Company.

“Net sales increased 2.0 percent in the third quarter, excluding unfavorable foreign currency translation. We were very pleased with North America gross margin expansion that resulted in solid operating profit growth,” Bilbrey added.

With regard to the adjusted gross margin, the third quarter witnessed a 46 percent record as compared to 43.8 percent in the third quarter of 2014. The company believes that this 220 basis point jump was prompted by supply chain productivity and costs savings initiatives, unfavourable sales mix and price realisation.

As a result of the transformation in consumers’ demand, the company has estimated that full-year net sales would remain flat. It expects unfavourable foreign currency rates to increase. However, excluding such currency exchange rates, full-year net sales are expected to increase about 1.5 percent to 2.0 percent.

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