The Hershey Company (NYSE:HSY) shares are trading lower on Thursday after the company reported Q2 financial results. It raised the bottom end of its profit forecast, but volume dips played as a dampener for investors.

Hershey reported second-quarter adjusted earnings per share of $1.90, beating the analyst consensus estimate of $1.43.

Quarterly sales of $2.79 billion (an increase of 6.6% year-over-year) outpaced the Street view of $2.63 billion. Organic net sales, on a constant currency basis, increased 3.6% Y/Y.

Segments And Volumes

Hershey’s North America Confectionery segment net sales were $2.17 billion in the quarter, up by 4.2% Y/Y versus the same period last year. 

Volume declined approximately 10 points Y/Y, reflecting price elasticity and normal quarter-to-quarter shipment variability, partially offset by retailer inventory replenishment.

North America Salty Snacks segment net sales were $387.8 million in the quarter, up by 22.9% Y/Y.

The chocolate maker said the consolidated volume declined approximately 8 points Y/Y, primarily reflecting elasticity impacts in North America Confectionery and International, partially offset by growth in North America Salty Snacks. 

Profits And Margins

Quarterly adjusted gross margin was 41.6%, up 350 basis points Y/Y, driven by net price realization, lower net commodity costs, and productivity program savings.

Adjusted operating profit of $563.5 million increased 37.3% Y/Y. Adjusted operating profit margin of 20.2% increased 450 basis points Y/Y.

Hershey’s executives said stronger second-half innovation, seasonal programs, better cocoa visibility and supply-chain improvements should support growth despite near-term pressure in salty snacks and consumer spending.

Innovation And Seasons Support Growth

CEO Kirk Tanner said Hershey is positioned to deliver growth in the second half, helped by launches and merchandising programs tied to Hershey’s n’ Creme, Reese’s Pieces with Chocolate Cookie and the Hershey movie activation.

Tanner said Hershey also has a stronger Halloween program, with early shipments already underway and stronger customer support. He said the company used learnings from last year to improve consumer engagement and retailer execution.

He added that Jolly Rancher, Cadbury and other premium brands continue to show momentum. He also said Hershey’s s’mores execution was strong and should keep improving through tentpole events such as summer and fall football.

Cocoa And Margins Shape Outlook

CFO Steve Voskuil said Hershey has good visibility into cocoa deflation next year, even if futures remain near current levels. He said the company will not rely only on cocoa relief and will also focus on top-line growth, volume recovery, innovation, retailer partnerships and productivity.

Tanner said Hershey still views its 2027 framework as achievable. He said the company expects North America confectionery organic net sales growth to start around 2% in 2027 because of a shorter Easter season, with salty snacks and international operations adding to total growth.

Voskuil said Hershey expects meaningful gross margin improvement in the second half as commodity benefits become more visible, though salty-snack logistics costs remain a headwind.

Snacks And International Remain Growth Areas

Tanner said Dot’s Pretzels remains a growth driver, even after manufacturing and logistics constraints pressured margins. He said automation is already starting to help, with additional capacity expected to come online in 2027.

Voskuil said Hershey expects modest margin improvement in snacking during the second half as the company works through elevated freight and logistics costs and optimizes its supply chain.

On international growth, Voskuil said Brazil, the U.K. and India were among Hershey’s strongest markets in the first half. Tanner said the company is building momentum in anchor markets including Mexico, Brazil, Canada and the U.K., while making choices to support long-term international profitability.

Outlook

Hershey raised its fiscal 2026 GAAP EPS guidance from the prior range of $7.77-$8.19 to $7.89-$8.17 versus the $7.97 analyst estimate.

The company raised its fiscal 2026 adjusted EPS guidance from previous expectations of $8.20-$8.52 to $8.36-$8.52 against an $8.48 analyst estimate.

It reiterated its fiscal 2026 sales outlook of $12.159 billion-$12.277 billion compared to the $12.245 billion estimate.

HSY Price Action: Hershey shares were down 2.18% at $179.90 at the time of publication on Thursday, according to Benzinga Pro data.

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