Hershey's Salty Snacks Sales Rose 23% in Q2 2026. The Profit From Them Fell 6%

Hershey sold fewer sweets in the second quarter of 2026 and made much more money from them. Volume in its North America confectionery business fell about 10 points. Income from that same business rose 40.1%. The whole quarter sits on that trade.

Adjusted earnings per share came in at $1.90 against a consensus near $1.43. Net sales were $2,787.3 million, up 6.6%. Hershey then narrowed its full-year outlook upward, to net sales growth of 4.5% to 5% and adjusted earnings per share of $8.36 to $8.52, against $6.31 in 2025. The shares fell about 1% on the day.

Twelve points of price against eight points of volume

Organic constant currency sales grew 3.6% in the quarter. Price added about 12 points. Volume took away about 8. North America Confectionery was wider again, at roughly 14 points of price and a 10 point volume decline. The International segment ran 10 points of price against 8 points of volume and posted a $5.1 million segment loss, a fall of $24.9 million on last year.

US candy, mint and gum takeaway rose 3.7% in the 12 weeks to 19 July. Hershey's share of that category fell. The company gave the reason in a single line: increased competitive innovation. Rivals are taking share with new products while Hershey holds the P&L together with price.

The growth engine grew 0.6% on its own

North America Salty Snacks reported net sales of $387.8 million, up 22.9%. About 22 of those points came from LesserEvil, the better-for-you snack business Hershey bought in 2025. Organic constant currency growth was 0.6%.

Segment income was $62.6 million, down 5.9% on last year. Margin fell 500 basis points to 16.1%. Hershey pointed to higher logistics costs, lower price realisation, heavier consumer marketing and weaker mix. Volume did grow about 4 points, held back by supply limits and execution problems on multipacks and Dot's Pretzels.

So the segment Hershey has built its strategy around sold nearly a quarter more product and earned less money doing it. Confectionery margin in the same three months was 32.5%. Salty snacks was 16.1%. Every point of mix that moves from the first to the second costs the company money before anything else happens. At its March investor day, Hershey told the market it was built to lead next generation snacking across sweet, salty and functional. This quarter puts a number on what that shift costs while it is being built.

How much of the profit came from hedging

The reported figures look spectacular. Reported earnings per share of $2.26, up 629%. Reported operating profit of $642.6 million, up 233.3%. Reported gross margin of 45.3% against 30.5% a year ago. A large share of that is accounting. Hershey booked a $102.9 million mark-to-market gain on commodity derivatives in the quarter, against a $200.7 million loss in the same quarter of 2025. That is a swing of more than $303 million with no cases of chocolate attached.

Take the hedging out and adjusted gross margin was 41.6%, up 350 basis points. Adjusted operating profit rose 37.3%. That is a real recovery at roughly a quarter of the headline size. Anyone reading a competitor release this earnings season should find the derivative line before they read the growth rate.

Cocoa fell hard. Shelf prices did not

Cocoa futures traded near $5,327 a tonne in late July, down about 34% over a year and around 70% below the late 2024 peak of nearly $12,000. Hershey still took 14 points of price in its largest segment. Lindt has said it may make selective price cuts in the second half to protect volume. The gap between falling cocoa and standing shelf prices is where the next fight in chocolate happens.

Forward buying explains part of the lag. Chocolate makers cover beans months ahead, so cheaper cocoa reaches the profit line slowly. That buffer is also a clock. Once the expensive cover runs off and one large player cuts, holding price stops being a cost decision and becomes a share decision.

What the second half tests

Hershey has guided to about $100 million of savings from its automation programme and capital spending of $425 million to $475 million. It says it has cost visibility and operating flexibility. The open question is whether it can grow units again without handing back the price. Two quarters of falling volume can be read as elasticity. Four quarters with falling share is a positioning problem.

For operators, the read is plain. Price carried the first half across most of packaged food, and that engine has a limit that arrives with the first competitor cut. For investors, the segment table matters more than the headline number: a company trading a 32.5% margin category for a 16.1% margin one needs unit growth to make the maths work, and units are the line that is falling. For buyers, LesserEvil shows both faces of a deal at once. It gave Hershey a growth story in a quarter when the organic business grew 0.6%, and it diluted the margin while doing it.