The Hershey Company’s net sales were up 3% in the third quarter, which ended Sept. 27.
However, President and CEO Kirk Tanner noted during the company’s earnings call on Friday that the c-store channel poses a particularly challenging sales environment, pointing out that sales in the U.S. candy, gum, and mint category, which includes several Hershey brands, declined nearly 5% in September.
“As September progressed, we saw consumers become more deliberate about spending, particularly in channels most exposed to higher gas prices like convenience stores,” said Tanner in the earnings call.
He added that consumer caution persisted into October, “though our categories are holding up comparatively well.”
In the Q&A portion of the call, he highlighted that c-stores were an outlier among the retail channels Hershey sells in.
Dave Hulays, senior vice president and chief financial officer, said that while c-store sales were down, shoppers were spending more at places like mass-market retailers or online.
“When we do step back, we see it as more of a channel and trip problem, not as much a category issue, and so we're focused on value levers: innovation, price pack architecture, surgical promotion,” he said.
Those concerns reflected data shared by NACS that transactions are down across convenience retail. The total number of in-store transactions during the first half of this year fell 4.5% year over year.
“It’s not pretty,” Chris Rapanick, managing director of NACS Research, said during a presentation at the association’s annual conference last month.
There are some signs that conditions may improve. Consumer confidence rose in October, and fuel prices are down from a month ago as well.
As for Hershey, it’s still optimistic about the c-store space.
“I really think the category is in a decent place with all these consumer headwinds,” said Tanner in the earnings call. “Obviously, we expected the c-store business to soften a little bit with gas prices, but we still see a robust category.”
