The Hershey Company
(
HSY
) reaffirmed its full year 2013 guidance and provided an update
on the company's growth initiatives at the 2013 Consumer Analyst
Group of New York (CAGNY) conference.
The company discussed several initiatives to drive growth over
the long term.
The company is bullish about its North America business and
intends to make further investments and expand its presence in
the region in order to drive growth. The company intends to
continue focusing on core brands in the U.S.
Hershey is also keen on expanding its geographic footprint. The
company intends to drive its top-line growth further by focusing
on emerging countries with strong GDP and increasing consumer
spending power. Hershey intends to expand its five core brands of
Hershey's, Reese's, Hershey's Kisses, Jolly Rancher and Ice
Breakers in these markets. The company believes that about 15% to
20% of net sales will be generated outside the U.S and Canada in
fiscal 2013. By the end of 2014, the company intends to achieve
its target of $1 billion in international net sales. Its
long-term plan is to achieve international revenue increase in
the range of 10% to 25% of total company sales.
Given the company's robust liquidity position, Hershey is also
investing in marketing in order to drive revenue increase. In
fact, advertising is the most important component of brand
building. The company expects its advertising to be same or
increase 2 times its net sales growth. The company's brand
investments give it a competitive advantage and are one of the
principal reasons behind the company witnessing better volume
elasticity versus its peers.
The company aims to be a $10 billion company by 2017.
Full Year 2013 Outlook Retained
The company maintained its outlook for net sales growth in a
range of 5%-7% for the long term. Volume growth of core brands
driven by increased promotional efforts and innovation are
expected to help Hershey achieve its sales targets.
Gross margins are expected to expand in 2013 by 180-200 basis
points as input cost inflation subsides. Productivity gains and
costs savings will also boost margins.
The company maintained its adjusted earnings guidance in a range
of $3.56-$3.63, which represents growth of 10%-12% year over
year.
Investments in core brand marketing, regular product innovation,
productivity improvement and moderate commodity cost inflation
are expected to help it achieve these targets despite a
challenging macroeconomic environment.
Hershey carries a Zacks Rank #2 (Buy).
Other companies in the sector that warrant investor attention
include
Flowers Foods, Inc.
(
FLO
),
ConAgra Foods, Inc.
(
CAG
) and
J&J Snack Foods Corp.
(
JJSF
) all carrying a Zacks Rank #1 (Strong Buy).
CONAGRA FOODS (CAG): Free Stock Analysis
Report
FLOWERS FOODS (FLO): Free Stock Analysis
Report
HERSHEY CO/THE (HSY): Free Stock Analysis
Report
J&J SNACK FOODS (JJSF): Free Stock Analysis
Report
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