8-K: Hershey's Q4, Full-Year 2025 Results & Strong 2026 Outlook

The Hershey Company reported mixed Q4 and full-year 2025 results with significant net income declines, but provided an optimistic 2026 outlook driven by sales growth and gross margin recovery.

Summary

• Consolidated net sales for Q4 2025 increased 7.0% to $3,091.0 million, with organic, constant currency net sales up 5.7%.
• Reported net income for Q4 2025 decreased 59.9% to $320.0 million, resulting in reported diluted EPS of $1.57, a 59.9% decrease.
• Adjusted diluted EPS for Q4 2025 was $1.71, a decrease of 36.4%.
• Full-year 2025 consolidated net sales increased 4.4% to $11,692.6 million, with organic, constant currency net sales up 4.2%.
• Full-year 2025 reported net income decreased 60.3% to $883.3 million, resulting in reported diluted EPS of $4.34, a 60.3% decrease.
• Full-year 2025 adjusted diluted EPS was $6.31, a decrease of 32.7%.
• The significant declines in reported net income and EPS for 2025 were primarily due to a large derivative mark-to-market loss recorded in 2025 and fewer renewable energy tax credits.
• For 2026, full-year reported net sales are expected to increase between 4% and 5%, driven by net price realization and increased innovation and advertising.
• Full-year 2026 reported diluted EPS is expected to be in the range of $7.77 to $8.19, an increase of 79% to 89% versus 2025.
• Full-year 2026 adjusted diluted EPS is expected to be in the range of $8.20 to $8.52, an increase of 30% to 35% versus 2025, with sales growth and gross margin recovery expected to offset increased strategic investments and higher interest expense.
• Acquisitions, including Sour Strips (2024) and LesserEvil, LLC (2025), contributed to net sales growth.

Sentiment

Score: 6

Explanation: StockSavvy.ai views this as a mixed report; while 2025 results show significant declines, largely due to specific non-recurring items, the strong 2026 outlook and robust performance in key segments like Salty Snacks indicate underlying business strength and management confidence in a turnaround.

Positives

• Consolidated net sales increased 7.0% to $3,091.0 million in Q4 2025, demonstrating continued top-line growth.
• North America Salty Snacks segment net sales surged 28.0% in Q4 2025, with organic, constant currency net sales increasing 18.2%, driven by strong retail demand and volume growth.
• SkinnyPop ready-to-eat popcorn retail sales increased over 8%, and Dots Homestyle Pretzels retail sales grew over 20%, solidifying its position as the #1 pretzel brand.
• The 2026 full-year outlook projects robust growth, with reported net sales expected to increase 4% to 5% and adjusted EPS growth of 30% to 35%.
• Anticipated gross margin recovery in 2026 is a positive indicator for future profitability.
• The Advancing Agility & Automation Initiative is expected to generate approximately $100 million in savings.

Negatives

• Reported net income for Q4 2025 decreased significantly by 59.9% to $320.0 million, and reported diluted EPS fell 59.9% to $1.57.
• Full-year 2025 reported net income decreased 60.3% to $883.3 million, with reported diluted EPS down 60.3% to $4.34.
• Adjusted gross margin decreased 650 basis points to 38.3% in Q4 2025, primarily due to higher commodity costs, incremental tariff expenses, and lower volume.
• The International segment reported a loss of $31.6 million in Q4 2025, a decline of $61.1 million, with organic, constant currency net sales decreasing 1.9% due to volume declines and price elasticity.
• Reported operating profit decreased 52.6% in Q4 2025 and 50.3% for the full year 2025.
• A goodwill impairment charge of $6.4 million was recorded in 2025 related to a reporting unit in the International segment.
• Higher interest expense of approximately $200 million to $210 million is projected for 2026.

Risks

• Disruptions or inefficiencies in the supply chain due to the loss or disruption of essential manufacturing or supply elements or other factors.
• Issues, concerns, or regulatory changes related to the quality and safety of products, ingredients or packaging, human and workplace rights, and other environmental, social or governance matters.
• Changes in raw material and other costs, along with the availability of adequate supplies of raw materials and the ability to successfully hedge against volatility in raw material pricing.
• The ability to successfully execute business continuity plans to address changes in consumer preferences and the broader economic and operating environment.
• Selling price increases, including volume declines associated with pricing elasticity.
• Increased marketplace competition.
• Failure to successfully execute and integrate acquisitions, divestitures and joint ventures.
• Changes in governmental laws, regulations and policies, including taxes and tariffs.
• Political, economic, and/or financial market conditions, including with respect to inflation, rising interest rates, slower growth or recession, evolving priorities of the U.S. administration, and other events beyond control such as the impacts on the business arising from international conflicts and geopolitical tensions.
• Risks and uncertainties related to international operations.
• Disruptions, failures or security breaches of information technology infrastructure and that of customers and partners (including suppliers).
• The ability to hire, engage and retain a talented global workforce.
• The ability to realize expected cost savings and operating efficiencies associated with strategic initiatives or restructuring programs.
• Complications with the design, implementation or usage of a new enterprise resource planning system, including the ability to support post-implementation efforts and maintain enhancements, new features or modifications.

Future Outlook

The company projects full-year 2026 reported net sales to increase between 4% and 5%, driven by net price realization, increased innovation, cultural and seasonal activations, and higher advertising levels. Reported earnings per share are expected to be in the range of $7.77 to $8.19, an increase of 79% to 89% versus 2025. Adjusted earnings per share are anticipated to rise 30% to 35% to a range of $8.20 to $8.52. This growth is expected to be fueled by sales growth and gross margin recovery, which are projected to more than offset increased strategic investment in brands, capabilities, and technology, as well as higher interest expense.

Management Comments

• "As we enter 2026, we have strong conviction in the momentum of our business." Kirk Tanner, The Hershey Company President and Chief Executive Officer.
• "I'm proud of how our teams have navigated a challenging environment, demonstrating operational excellence, impactful innovation, and skillful execution that is driving real results." Kirk Tanner, The Hershey Company President and Chief Executive Officer.
• "We are building the capabilities and brand investments that position us for continued success, with a focus on strengthening our foundation, improving profitability, and advancing the next phase of our strategy to deliver long-term growth and value creation for our shareholders." Kirk Tanner, The Hershey Company President and Chief Executive Officer.

Industry Context

StockSavvy.ai notes that Hershey's performance reflects broader trends in the consumer packaged goods sector, where pricing power remains crucial amidst inflationary pressures on commodity costs. The strong growth in salty snacks, particularly with brands like SkinnyPop and Dots Pretzels, highlights the continued consumer demand for convenient snack options and successful brand integration post-acquisition. The challenges in the International segment, however, suggest varying market dynamics and price elasticity globally, indicating a need for tailored strategies in different markets.

Comparison to Industry Standards

• The significant decline in reported net income and EPS for 2025, largely due to derivative mark-to-market losses and tax adjustments, makes direct comparison to peers like Mondelez International or Nestlé challenging without similar one-off impacts.
• Hershey's North America Salty Snacks segment's 28.0% net sales increase and 18.2% organic growth in Q4 2025, with SkinnyPop growing over 8% and Dots Pretzels over 20%, demonstrates strong category leadership and brand performance, potentially outpacing some competitors in the snack food space.
• The projected 30-35% adjusted EPS growth for 2026 indicates a strong recovery and strategic positioning, which could be competitive within the consumer staples sector, especially if gross margin recovery materializes as expected.

Stakeholder Impact

• Shareholders: Significant decline in 2025 reported earnings may raise concerns, but the strong 2026 outlook could reassure investors of future value creation and recovery.
• Customers: Continued innovation and increased advertising are aimed at supporting demand and enhancing customer engagement, potentially leading to new product offerings.
• Employees: Business realignment activities and transformation programs may involve severance and employee benefit costs, indicating potential workforce adjustments or efficiency drives.
• Suppliers: Higher commodity costs and tariff expenses impact the supply chain, potentially affecting supplier relationships and pricing negotiations, though supply chain productivity initiatives aim to mitigate this.

Next Steps

• Hershey will post a pre-recorded management discussion of its Q4 and full-year 2025 results and business update to its website at www.thehersheycompany.com/investors on February 5, 2026, at approximately 7:00 a.m. (Eastern time).
• The company will host a live question and answer session with investors and financial analysts on February 5, 2026, at 8:30 a.m. (Eastern time).

Key Dates

Recommendation

While the 2025 reported financial results show significant declines, largely due to specific non-recurring items like derivative mark-to-market losses and tax adjustments, the underlying business demonstrates resilience with strong sales growth in key segments like North America Salty Snacks. The robust 2026 outlook, projecting substantial increases in both net sales and adjusted EPS, suggests a strong recovery and strategic initiatives taking hold. Given the mixed current performance but optimistic future guidance, a 'hold' recommendation is appropriate as investors await execution on the 2026 targets and gross margin recovery.

Keywords

Hershey, HSY, Q4 2025, Full-Year 2025, 2026 Outlook, Financial Results, Net Sales, Earnings Per Share, Confectionery, Salty Snacks, LesserEvil, Sour Strips, Commodity Costs, Gross Margin, Operating Profit, SEC Filing, Consumer Staples, Food & Beverage