Supply chain woes and high demand may give Halloween the kiss of death Hershey warns.
It’s the kind of thing that could give Freddy Krueger nightmares.
The movie monstrosity would likely be scared clear off of Elm Street after candy making icon Hershey (HSY) – Get The Hershey Company Report said it won’t be able to satisfy all the trick-or-treaters this Halloween due to a double whammy of supply headaches and big time consumer demand.
‘Capacity Constraints’
“Seasonal consumer engagement is expected to remain high, and we expect high single digit sales growth for both our Halloween and Holiday seasons,” Hershey Chairman and CEO Michele Buck said during the second-quarter earnings call. “Despite this strong growth, we will not be able to fully meet consumer demand due to capacity constraints.”
Given many of the company’s everyday and seasonal products are made on the same line, Buck said that “we have needed to balance production over the past several months to improve everyday on-shelf availability and build seasonal inventory at the same time.”
“As we head into next year with healthier inventory levels and more capacity,” she said, “we believe we will be well-positioned to meet consumer demand across our everyday and seasonal portfolios.”
In addition to the famous chocolate bar, Hershey also provides the world with Reese’s Peanut Butter Cups, York Peppermint Patties, the Fifth Avenue Bar, the Kit Kat Bar, and, of course, Hershey’s Kisses.
Make no mistake, candy sales have been surging. The total confectionery category hit a record $36.9 billion in retail sales in 2021 and is projected to reach $44.9 billion in sales by 2026, according to the National Confectioners Association.
‘Stop Being Lame’
A number of people on social media reacted to the impending shortage with a spoonful of snark.
“There’s literally candy at every corner store or box stores… stop being lame…,” one person tweeted.
“one job, all year to do it, c”mon Hershey…” another commenter said.
“Snackflation?” another tweeter asked.
One person complained about all all “the silly stories about nothing.”
“Surely there are at least 12 stories that deserve equal or more attention than chocolate candy shortages?” the person asked. “For example, missing and exploited children.”
“Terrible!” another commenter said. “And here I thought, the Ukraine war, impending famine in parts of Africa, China threatening the asia pacific region, worldwide recession and me going bald were bad.”
‘This is How it Starts’
The dreadful news comes just after Unilever’s (UL) – Get Unilever PLC Report Klondike said it’s discontinuing the Choco Taco ice cream treat because the company said it “had to make very tough decisions to ensure availability of our full portfolio nationwide.”
Even horror master Stephen King was horrified by the looming snack dead zone.
“If Choco Tacos are gone, what’s next?” King tweeted. “Hershey Pies? Salt and vinegar potato chips? Baseball? AMERICAN DEMOCRACY? I tell you: this is how it starts.”
As far as the numbers are concerned, Hershey posted second-quarter net income of $315.6 million, or $1.53 a share, up from $301.2 million, or $1.45 a share, a year ago.
Adjusted earrings came to $1.80 a share, which beat the FactSet consensus for $1.69.
Sales totaled $2.373 billion, up from $1.989 billion and surpassing FactSet’s call for $2.238 billion.
The company raised its full-year sales guidance to 12% to 14% growth, up from 10% to 12% growth.
