The Hershey Company reported fourth-quarter and full-year 2025 results highlighting continued sales growth amid what management described as “unprecedented cocoa inflation” and broader macro volatility, while outlining a 2026 plan centered on accelerating growth, restoring margins, and increasing investment behind brands and capabilities.
2025 results: Sales growth despite cocoa and tariff pressures
Hershey (NYSE:HSY) President and CEO Kirk Tanner said the company is entering 2026 with “meaningful momentum,” citing disciplined execution, strengthened customer relationships, and innovation across its confection and salty snacks businesses. For the fourth quarter, total net sales increased 7%, and full-year net sales grew 4.4%.
Segment performance: Confection steady, salty snacks surging
Tanner described the U.S. snacking environment as steady in the fourth quarter, with consumers “spend[ing] selectively” on items that deliver emotional or functional value. He said U.S. confectionery category retail takeaway accelerated in 2025, and confection was the third-fastest-growing U.S. snacking category for the year behind nutritional bars and meat snacks.
In North America Confectionery, Voskuil reported fourth-quarter net sales increased 5.3%, including a 40-basis-point benefit from the Sour Strips acquisition. Net price realization contributed about 10 points, while volume fell roughly 5 points due to price elasticity, partially offset by innovation, holiday programming, and one extra shipping day.
North America Salty Snacks posted the largest increase. Voskuil said segment net sales rose 28% in the fourth quarter, including 18.2% organic constant currency growth. Volume growth of about 14 points was driven by distribution and velocity gains, innovation, and variety pack expansion. The company’s planned reduction of sales to private-label customers was described as a mid-single-digit headwind to volume, largely offset by earlier shipments of “New Year New Me” programming and an extra shipping day. Net price realization contributed 4 points, and the LesserEvil acquisition added about 10 points to segment growth.
Tanner said U.S. salty snacking retail sales growth accelerated to 15.6% in the fourth quarter and increased 11.3% for the full year, calling 2025 “an exceptionally strong year.” He highlighted SkinnyPop ready-to-eat popcorn and Dot’s Pretzels as two of the fastest-growing brands among top salty brands, with fourth-quarter retail sales growth of 8% and 21%, respectively. He added that variety pack investments contributed nearly two points to fourth-quarter retail growth and 1.2 points for the year, and that the salty snacks business gained nearly 40 basis points of share in 2025.
International results were more mixed. Voskuil said fourth-quarter international net sales increased 0.4% to $256 million, while organic constant currency net sales declined 1.9%, as price realization of about 2 points was more than offset by a 4-point volume decline and an approximate 4-point headwind from shipment timing. For the full year, Tanner said the international segment delivered organic constant currency net sales growth of 2.2%, with market share gains in Mexico, Brazil, and the U.K. He also said Reese’s posted double-digit international growth and exceeded $300 million in net sales outside the U.S.
Margins and costs: Gross margin down in Q4, recovery targeted in 2026
Voskuil said fourth-quarter adjusted gross margin was 38.3%, down 650 basis points from the prior year. He attributed the decline to commodity inflation, incremental tariff expenses of approximately $30 million, and lower volume, partially offset by net price realization, productivity, and transformation savings. He said the result was ahead of expectations due to tariff policy relief and strong supply chain performance.
Advertising and related consumer marketing expense increased 4.2% in the quarter, driven by higher investment in salty snacks and international, partially offset by reduced agency fees and higher media efficiencies in North America confectionery. Adjusted operating expenses excluding advertising rose 12.6%, driven by higher incentive compensation, partially offset by transformation program savings.
Both Tanner and Voskuil emphasized savings from the company’s efficiency efforts. Tanner said the AAA program generated over $300 million in net savings over the past two years and is projected to deliver an incremental $100 million in 2026. Voskuil added that the AAA transformation program delivered about $160 million in net savings in 2025, slightly ahead of target, and reiterated the expectation for an incremental $100 million in net savings in the final year of the program in 2026. Voskuil also said the company expects an incremental $230 million in efficiency and transformation savings in 2026.
2026 outlook: 4%–5% sales growth and about 400 bps of gross margin recovery
Management framed 2026 as an “inflection point,” with Tanner outlining three priorities: top-line growth at or above categories, sustainable margin and earnings improvement while increasing investments for future years, and continued evolution of strategy and organization.
For 2026, Voskuil said the company expects total net sales growth of 4% to 5%, including about 150 basis points from the LesserEvil acquisition, with foreign currency expected to be immaterial. Organic net sales growth is projected at 2.5% to 3.5%, driven by announced pricing, innovation, increased brand investment, and a strong activation calendar, partly offset by a low single-digit decline in the international segment due to elasticity and strategic portfolio decisions supporting profit recovery.
Net price realization is anticipated to be approximately 10 percentage points. Management said elasticity has been monitored closely, especially in January, and Tanner noted the company modestly adjusted its elasticity outlook to reflect results that have been favorable versus its original forecast, while remaining cautious about factors that can affect elasticity over time.
On profitability, Voskuil guided to around 400 basis points of adjusted gross margin recovery in 2026. He said the company expects a low single-digit decline in total cost of goods sold for 2026, reflecting elasticity-driven volume reductions net of cost absorption, stable commodity and packaging rates, and modest increases in labor and other manufacturing costs, offset by productivity and transformation savings. For timing, he said first-quarter adjusted gross margin will remain pressured by higher-cost commodities and tariff costs, with a significant recovery projected to begin in the second quarter.
Innovation, brand investment, and capital allocation
Tanner said the company is planning an active innovation and marketing calendar in 2026, including increased production capacity for Reese’s Oreo, the launch of Shaq-A-Licious SLAMS gummies and Jolly Rancher Heat Wave, and reformulation work for SkinnyPop White Cheddar and other dairy items. He also said the company will activate 10 major cultural and seasonal moments and boost media investment by double digits, including new media campaigns for Reese’s and Hershey’s brands in the first quarter, described as the first such launches in eight years. Pirate’s Booty will also receive new media support and renovated packaging, according to Tanner.
Voskuil said first-quarter 2026 net sales are expected to increase by high single digits, citing momentum from the fourth quarter, an earlier Easter, and favorable year-over-year comparisons in the convenience channel. He also said the company’s 2026 outlook incorporates assumptions for potential demand headwinds, including accelerating health and wellness trends, increasing GLP-1 adoption, government policy changes, and ongoing consumer financial strain.
On earnings, Voskuil said the company expects 2026 adjusted EPS in a range of 30%–35%. He said first-quarter earnings are expected to decline low single digits due to residual commodity and tariff pressure and elevated investment levels, which are expected to more than offset strong top-line growth, while adjusted EPS is expected to grow by double digits in each quarter for the remainder of 2026.
For capital allocation, Voskuil said capital additions were $138 million in the fourth quarter and about $455 million for 2025. Dividends totaled $271 million in the quarter and $1.1 billion for the year, and the company did not repurchase shares in the quarter, with $470 million remaining under the current authorization. For 2026, capital expenditures are projected at $425 million to $475 million. Voskuil also said the company is raising its dividend by 6% and plans to evaluate opportunistic share repurchases.
Management said additional details on the company’s long-term strategy, innovation roadmap, and capital allocation priorities will be shared at an investor day scheduled for March 31.
About Hershey (NYSE:HSY)
The Hershey Company (NYSE: HSY) is a leading North American chocolatier and snack manufacturer headquartered in Hershey, Pennsylvania. The company develops, produces and markets a wide range of confectionery and snack products for retail, foodservice and international customers. Hershey’s business spans manufacturing, branded product marketing, packaging and distribution across grocery, convenience, mass merchant and e-commerce channels.
Hershey’s product portfolio centers on chocolate and sugar confectionery, including core brands such as Hershey’s, Reese’s, Hershey’s Kisses and Twizzlers, alongside non-chocolate snacks and confectionery brands.
