The Hershey Company HSY is leaning on one of its biggest competitive strengths, pricing power, to navigate an environment marked by elevated commodity and tariff-related costs. The company’s first-quarter 2026 results showed that consumers continued to absorb higher prices across key markets, helping support sales growth even as volume trends remained pressured.
Net sales increased 10.6% to $3,104.2 million in the quarter, while organic, constant-currency net sales rose 7.9%. The increase was driven primarily by approximately 10 points of net price realization, partly offset by an approximately 2-point decline in volume.
The performance highlights Hershey’s ability to push through pricing actions while maintaining demand across much of its portfolio. However, the results also illustrate the trade-off between pricing and volume, as elasticity pressures continued to weigh on shipment volumes in certain businesses.
Pricing Continues to Do the Heavy Lifting for Hershey
North America Confectionery remained a clear example of the pricing strategy at work. Organic, constant-currency net sales increased 8%, supported by approximately 12 points of net price realization. Volume declined about 4%, reflecting price elasticity and one fewer shipping day, though the impact was partly offset by favorable shipment timing and innovation performance.
A similar trend emerged internationally. Net sales increased 16.1%, while organic, constant-currency sales rose 9.3%. Pricing contributed roughly 12 points of growth, reflecting strategic pricing actions across markets. Volume decreased approximately 2%, reflecting elasticity impacts, partially offset by favorable shipment timing in select markets and continued strength in Brazil.
While pricing boosted revenue growth, cost inflation continued to pressure profitability. HSY’s adjusted gross margin declined 80 basis points to 40.4%, as higher commodity and tariff-related costs more than offset pricing benefits and productivity gains.
Pricing actions are supporting top-line growth and helping mitigate inflationary pressures, but commodity and tariff-related costs remain a meaningful margin headwind. The effectiveness of future pricing actions, combined with productivity and transformation savings, will remain central to how successfully Hershey manages these cost pressures through the remainder of the year.
The Zacks Rank #3 (Hold) stock has risen 6.5% over the past six months compared with the industry’s growth of 5.2%.
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Stocks to Consider
The Chef's Warehouse, Inc. CHEF, a specialty food distributor serving restaurants, hotels and hospitality customers, sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for The Chef's Warehouse’s current financial-year sales and earnings indicates growth of 8.3% and 24.7%, respectively, from the prior-year reported levels. CHEF delivered a trailing four-quarter earnings surprise of 28.9%, on average.
Tyson Foods, Inc. TSN operates as a leading protein company, producing chicken, beef, pork and prepared food products. TSN currently carries a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Tyson Foods’ current fiscal-year sales calls for growth of 4.5%, while the consensus mark for earnings indicates a 0.5% increase from the year-ago reported figures. TSN delivered a trailing four-quarter earnings surprise of 18.1%, on average.
Flowers Foods, Inc. FLO is a leading U.S. bakery company that manufactures and markets packaged bakery foods, including bread, buns, snack cakes and tortillas, under brands such as Nature’s Own, Wonder and Dave’s Killer Bread. FLO carries a Zacks Rank #2.
The Zacks Consensus Estimate for Flowers Foods’ current and next fiscal-year EPS has seen upward revisions by 5.6% and 11.9%, respectively, over the past 60 days.
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Hershey Company (The) (HSY): Free Stock Analysis Report
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Flowers Foods, Inc. (FLO): Free Stock Analysis Report
The Chefs' Warehouse, Inc. (CHEF): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).