Hershey Expects Improved Gross Margins In 2009
July 23 2009 - 9:19AM
Dow Jones News
Hershey Co. (HSY) - which reported second-quarter earnings above
of expectations - said it expects gross margins in 2009 to improve
as dairy prices and other commodities moderate.
The company will also no longer be marketing the Starbucks Corp.
(SBUX) brand of premium chocolate and is also winding down its
high-end brand of Cacao Reserve. Higher-end chocolate hasn't done
as well as consumers have cut back spending and retailers have been
more reluctant to give up shelf space to lower-performing
products.
Referring to the Starbucks chocolate brand, Hershey's Chief
Executive David West said the recession had been a bad time to
launch a premium brand and noted that on that brand Hershey had
been dealing with a partner that had other issues in its own core
business.
Speaking to investors on an earnings conference call, the
company's executives said it boosted its market share in the U.S.
during the quarter. The recession has helped Hershey's traditional
brands because consumers have moved to cheaper candy. The company
will offer fewer promotions later this year.
The stock was up 4.7% to $40.76 in trading early Thursday.
-Anjali Cordeiro; Dow Jones Newswires; 212-416-2200;
anjali.cordeiro@dowjones.com