Hershey Co (HSY.N) pulled its 2020 forecast on Thursday and warned of weak sales in certain categories as households worried about their financial futures cut spending on snacks and chocolates.
The company said sales of products, including SkinnyPop popcorn and Pirate’s Booty rice and corn puffs, had slowed in recent weeks, after rising in double digits in March, when consumers stockpiled food and other essentials ahead of lockdowns to limit the spread of the coronavirus pandemic.
“A significant number of American households are not working and experiencing meaningful financial pressures,” Chief Executive Officer Michele Buck said on a post-earnings call.
“All of this has impacted traffic into stores, length of time in stores and the amount of discretionary goods people are purchasing.”
A record 26 million Americans sought unemployment benefits over the last five weeks, confirming that all the jobs created during the longest employment boom in U.S. history were wiped out in about a month as the coronavirus forces companies to release or furlough employees.
The kisses chocolate maker also said social distancing practices have also hit gum and mint sales that are usually sold at the checkout counters, while demand for baking products soared.
Hershey’s net sales rose 1% to $2.04 billion in the first quarter ended March 29, but fell short of the average analyst estimate of $2.08 billion, according to IBES data from Refinitiv data.
Sales from its North American market rose 2.1%, its second-lowest sales growth in two years, while those from China fell 46.7% as the world’s second-largest economy imposed weeks-long lockdown because of the coronavirus. Sales in India, Mexico and Brazil, some of its bigger markets, also fell.
Excluding certain items, Hershey earned $1.63 per share, missing analysts’ average estimate of $1.71 per share.
Shares of the company were down about 2% at $139.85.