Hershey earnings rise in third quarter

by Keith Nunes
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HERSHEY, PA. — The Hershey Co.’s U.S. retail business, driven by an increased advertising spending, pushed earnings higher during the third quarter of fiscal 2009, ended Oct. 4. Net income during the quarter was $162,023,000, equal to 73c per share on the common stock, compared with net income of $124,538,000, or 56c per share during the same period of fiscal 2008.

Sales for the quarter declined slightly to $1,484,118,000 when compared with $1,489,609,000 for the third quarter of 2008.

As a result of the strong quarter the company raised its earnings guidance for the full year to a range of $2.12 to $2.14.

"Net sales, down slightly in the quarter versus the prior year, were in-line with our expectations as we’re lapping the buy-in related to the August 2008 price increase," said David J. West, president and chief executive officer. "Importantly, U.S. retail takeaway for the 12-weeks ended Oct. 3, 2009, in channels that account for over 80% of our U.S. retail business, was up 4.8%.

"In the channels measured by syndicated data, U.S. market share was flat for the 12-weeks ended Oct. 3, 2009, and up 0.3 points year-to-date. These results were driven by the investments we have made behind our core brands, including advertising, up about 50% in the third quarter."

For the first nine months of fiscal 2009, Hershey’s net income was $309,215,000, or $1.39 per share, compared with $229,250,000, or $1.03 per share. Sales for the period were $3,891,332,000, compared with $3,755,388,000.

Looking to fiscal 2010, Mr. West said, "As we look to 2010, we assume the economic environment for consumers in the U.S. and international markets will continue to be challenging. We’ll continue to focus on and make appropriate investments in our core brands and expect 2010 net sales growth to be within our 3% to 5% long-term objective.

"The sell through at retail for Halloween will be greatly affected by the remaining days in the season and will determine our approach to the upcoming holiday, Valentine’s and Easter seasons, all of which we expect will be at the higher seasonal promoted price points. While still early, for 2010, given our current views of our investments, marketplace performance, and cost structure, we expect growth in adjusted earnings per share-diluted to be within our long-term objective of 6% to 8%."

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