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Halloween trick-or-treating to soften Hershey’s supply chain troubles -Breaking

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© Reuters. FILEPHOTO: This photo illustrates Hershey’s chocolate bar in Encinitas on January 29, 2015. REUTERS/Mike Blake

By Mehr Bedi

(Reuters). Costumed trick or-treaters eagerly travel door-to-door this year following a deadly pandemic in 2020. Hershey Co (NYSE: ) expects to increase its annual sales, despite the supply chain issues plaguing this industry.

Hershey is home to about 70% of the United States’ manufacturing capacity. This will allow Hershey to deliver Kisses and Reese’s to customers in time for Halloween, which is anticipated to be the most expensive in terms of consumer spending.

Hershey’s October holiday period is Hershey’s busiest. It accounts for 10% of annual company sales.

Graphic – Halloween spending forecasts over the years: https://graphics.reuters.com/HERSHEY-RESULTS/byprjramape/chart.png

According to the National Retail Federation survey, Halloween merchandise spending is projected to hit an all-time high at $10.14 Billion this year. This compares to $8.05 Billion in 2020.

Because many couldn’t enjoy Halloween last year, there will be lots of demand for this Halloween. Arun Sundaram, CFRA analyst, said that this is coupled with the fact that consumers are generally in a healthy place and that vaccination rates have been increasing.

THE CONTEXT

Packaged food manufacturers have been hit hard by global supply chain problems and shortages of workers triggered in part by the pandemic. Soaring commodities prices such as wheat and sugar are also affecting the margins of these businesses.

Sundaram said that Hershey would be able to navigate the crisis (supply chain), because the company’s supply chain is simpler than other companies with a greater global reach.

NRF data indicates that Americans are more ready to celebrate Halloween in the year ahead of a year with limited trick-or treating.

THE FUNDAMENTALS

** Analysts forecast annual revenue of $8.82 billion for Hershey, which will report quarterly results before markets open on Thursday

** Full-year adjusted profit is estimated to be $6.91 per share

Graphic – Hershey likely to bump annual sales forecast on record Halloween spend: https://graphics.reuters.com/HERSHEY-RESULTS/jnvwewozlvw/chart.png

WALL STREET SENTIMENT

** The current average analyst rating for Hershey is “hold”, with a median price target of $185.00

** The company’s shares have risen nearly 20% this year

QARTER STARMINE IBES ACTUAL BEEAT, SURPRI

ENDING SMARTESTIMATE® ESTIMATE  MET, SE %

MISSED

Jun. 30 2021 1.42 1.43 1.47 Beat 3

Mar. 31 2021 1.79 1.80 1.92 Beat 6.7

Dec. 31 2020 1.42 1.43 1.49 Beat 4.5​

Sep. 30 2020 1.72 1.72 1.86 Beat 8.3

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