Hershey (HSY) lags so far behind its international competitors, that it was no surprise when it announced Tuesday it would slash 15% of its workforce, mostly outside the U.S., to amp up profitability.
Internationally, the Hershey, Pa.-based chocolate maker has been losing market share to such rivals as Mondelez (MDLZ) , owner of Cadbury confectionery, and privately held Ferrero and Nestle (NSRGY) .
Hershey has fallen back because it depends on North America for its customer base. Only about 30% of its revenues come from outside the U.S. and Canada. It had previously set a target to up its international footprint to 50% of revenues, but Tuesday's statement puts that goal into doubt.
The company, which has manufacturing facilities in Pennsylvania, Oregon, Virginia and Tennessee and outside the U.S. in Brazil, Canada, China, India, Japan, Korea, Malaysia, Mexico, the Philippines and the United Arab Emirates, said it expects sales growth by 2% to 4% over the long term, driven by its North American business.
"This update, versus the previous outlook, reflects changes in U.S. shopping habits and continued macroeconomic challenges impacting growth in international markets," the confectioner said. It plans to invest in its core confectionery business and expand the snacks business.
"Our objective is to ensure that we always have the right level of innovation, marketing plans and consumer and customer expertise to drive net sales growth, especially in our North America confectionery and snacks business," CEO Michele Buck said in the statement. "In addition, we're working to return our international businesses to profitability as soon as possible."
These efforts are expected to achieve adjusted operating profit margin target of about 22% to 23% by year end 2019.
Hershey attempted to right itself after it rejected a $23 billion unsolicited takeover offer from Mondelez last year, which would have given it a much-needed international expansion.
Hershey was up 1.06% in premarket trading at $109.50 on Wednesday morning. It closed at $108.35 on Tuesday in New York.
For now, it looks like Hershey's bars will be relegated to the American food aisle in London, for example, while Cadbury bars fly off the shelves.