Updated from 3:41 p.m. EST
warned Wall Street Tuesday that 1999 earnings will fall below already lowered expectations as a result of sluggish December sales.
The news forced Hershey shares to a 52-week low.
In September, Hershey lowered its expectations for full-year 1999 earnings from $2.40 to $2.16-$2.20 per share. Hershey said Tuesday it now believes the December slowdown will slice those estimates by about 10 cents. Before Monday's announcement, analysts polled by
First Call/Thomson Financial
expected $2.12 for the year.
The company expects to report fourth-quarter numbers on Jan. 31.
Hershey shares were down 2 3/8, or 5%, to 47 11/16 after reaching a new low of 46 5/16. (The stock closed down Tuesday 2 5/16, or 4.61%, to 47 13/16.)
The company said the December slowdown in customer order demand "appears to be in part a consequence of ... earlier customer service and order fulfillment issues." Hershey first disclosed those customer service glitches in its third-quarter earnings announcement in October. Hershey implemented a new order fulfillment and customer service system in July.
"It's a pretty bleak picture," said Daniel Peris, securities analyst at
. "I just don't see the company or the stock performing particularly well until these problems are through the system." Hershey plans on having its own warehouse up and running next summer; until then, Peris expects the company's distribution -- and earnings -- problems to continue. He rates the stock a hold; Argus does not do any Hershey underwriting.
On Tuesday, the company said it "continues to make progress implementing improvements to its new customer service, warehousing and order fulfillment business systems and processes, and customer service performance has improved significantly."