Hershey Company

Demand/consumption vs shipments: Easter timing distorted “real” demand in Q2 - Management said U.S. confection retail consumption was ~3% but understated real demand by ~2 percentage points due to non-measured channel growth and year-over-year Easter shipment concentration in 2026. - Also noted about +1 point of growth from retail inventory replenishment after shortages during the April transition to new pack prices. - Expect this “gap” to narrow in the second half as shipments better align with the demand signal (less timing noise).

Full-year 2026 outlook: small guidance increase, prudence remains despite better early results - Steve Voskuil emphasized the company expected the first half to be top-line weighted; the “modest” guidance increase largely reflects that replenishment largely completed in Q2. - Despite favorable early activity, they’re staying prudent on the back half due to still-elevated uncertainty (macro, competition, commodities). - Gross margin guide slightly lowered (still ~400 bps lift in the back half, but now just below 400 bps vs previously ~400 bps), reflecting some logistics/freight costs and salty-related challenges partially offsetting commodity benefits.

Second-half growth shape: Q3 & Q4 should benefit from innovation/tentpoles, but comps and timing are tough - CEO highlighted the second half is “action-packed”: merchandising programs (e.g., Hershey cream bars) plus major tentpoles like the Hershey movie and a robust Halloween plant with visibility. - Q3 merchandising shipment timing: about >1 point of expected Q3 merchandising shipped in Q2; management says it will largely neutralize against the extra shipping day in Q4, so the gap is less material later. - For earnings, they reiterated Q3 should be strongest YoY period primarily because last year’s tailwinds are lapped (notably highest cocoa cost and tariffs in Q3 2025).