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Hershey Results Far From Sweet

The candy maker misses estimates and cuts guidance.
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Hershey's (HSY) - Get Report third-quarter profit slid 66% as the candy maker was slammed by a triple whammy of charges, lower sales and rising costs.

The weak performance, as well as projections for more troubles in the fourth quarter, led the company to cut its earnings forecast for the full year.

Hershey posted third-quarter earnings of $62.8 million, or 27 cents a share, down from $185.1 million, or 78 cents a share, a year earlier.

The results included a pretax charge of $151.9 million, or 41 cents a share, tied to Hershey's ongoing restructuring plans. Excluding the charge, earnings were $157.2 million, or 68 cents a share, about 15% below the comparable year-ago figures.

Analysts polled by Thomson Financial expected earnings of 71 cents a share.

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Sales slipped to $1.40 billion from $1.42 billion a year earlier, a drop that Hershey attributed to the timing of seasonal shipments and inventory cuts by its distributors. Wall Street anticipated sales of $1.44 billion.

Aside from the lower sales, Hershey also was hit by higher dairy costs, which cut into profits.

Hershey has been battling rising milk costs all year, leading it to take down earnings expectations multiple times. Those costs come as the company also is struggling with a loss of market share and lower sales.

Against this backdrop, Chairman and CEO Richard Lenny recently announced that he will step down from the company. His departure, scheduled for December, comes amid rumors that he has clashed with the trust that controls the company.

For the full year, Hershey forecast earnings of $2.08 to $2.12 a share, below its prior forecast of about $2.25. Analysts, on average, predicted earnings of $2.23 a share.

"We do expect a sequential improvement in marketplace performance in the fourth quarter," said Lenny. "However, continued competitive activity as well as a tightening of inventory levels at select distributors will dampen sales performance in the fourth quarter."