Benzinga | Oct 28, 2021 03:01PM EDT

Hershey Sweetens FY21 Outlook After Q3 Beat

* Hershey Co (NYSE:HSY) reported third-quarter FY21 sales growth of 6.3% year-on-year, to $2.36 billion, beating the analyst consensus of $2.30 billion. Organic, constant currency net sales improved 4.4%.

* Hershey remarked that the growth lagged consumer demand as capacity constraints and supply chain disruptions resulted in lower retailer and distributor inventory levels.

* Hershey's North America segment net sales rose 5.5% Y/Y to $2.1 billion. Sales for Hershey's International and other segments increased 13.9% to $234.2 million.

* The gross margin contracted 370 basis points Y/Y to 45%, and gross profit decreased 1.7% Y/Y to $1.1 billion. Adjusted gross margin was 44.3%, a decrease of 110 basis points.

* The operating margin contracted 310 bps to 24.4%, and operating income for the quarter fell 6% Y/Y to $574.8 million.

* Adjusted EPS of $2.10 beat the analyst consensus of $1.99.

* Hershey held $675.5 million in cash and equivalents as of October 3, 2021.

* Outlook: Hershey raised the FY21 adjusted EPS outlook to $6.98 - $7.11 (prior view $6.79 - $6.92) versus the consensus of $6.91.

* It also raised sales growth guidance to 8% - 9% (prior 6% - 8%).

* The company expects anticipated consumer demand, an improved tax outlook, and brand investment to more than offset higher supply chain costs and inflation.

* Price Action: HSY shares are trading higher by 0.35% at $180.13 on the last check Thursday.