Hershey Temporarily Shuts 2 Locations Due to Coronavirus

The outbreak of the novel coronavirus led the renowned chocolate provider, The Hershey Company HSY, to temporarily close its Chocolate World locations in Hershey, Pa., and Times Square, New York City. The shutdown, which is scheduled to last for two weeks, took effect from the closing time on Mar 15. 

Though Hershey has not witnessed any confirmed coronavirus case among its workers, it made this decision as part of its precautionary and safety measures. Notably, the COVID-19 pandemic has resulted in considerable human suffering and a major economic disruption. The deadly virus has infected more than 160,000 people worldwide and the death toll has crossed 6,000.

Coming back to Hershey, its Chocolate World locations will continue to operate in Niagara, Canada and Las Vegas, as of now. Also, management did not talk about any impact of the aforementioned closure on its financial performance.

A Look at Hershey’ Growth Drivers

Hershey has been witnessing an impressive financial performance. In fourth-quarter 2019, this Zacks Rank #2 (Buy) company’s top and bottom lines grew year over year and the latter beat the Zacks Consensus Estimate. The company’s earnings gained from higher sales stemming from improved price realization and acquisitions. Further, organic sales rose 1.9% at cc on efficient pricing in the United States and volume increases in international markets. Additionally, adjusted gross margin improved on the back of favorable commodities and price realization.

Notably, buyouts have played an important role in augmenting Hershey’s revenues. In this regard, the company’s acquisition of ONE Brands, LLC, completed in September 2019, is bolstering the nutrition bar category. In fact, ONE Brands is expected to have a positive impact of 1 point on net sales in 2020. In August 2019, the company announced minority investments in Fulfil Holdings Ltd. and Blue Stripes L.L.C., both of which are slowly picking up pace in the snacking space.

Further, it regularly brings innovation to its core brands to meet consumer demands and needs. In this respect, the company is optimistic about its Kit Kat Duos innovation along with the expansion plans of the THiNS platform. Apart from this, Hershey is progressing well with its efforts to enhance operating efficiency. In line with this, the company’s SKU rationalizing efforts have been fruitful. Additionally, the company has undertaken initiatives to improve the price mix.

We expect these factors to continue working in Hershey’s favor.

3 More Consumer Staple Stocks Worth Noting

Darling Ingredients DAR, with a Zacks Rank #2, delivered a positive earnings surprise in the last reported quarter. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Campbell Soup CPB, with a Zacks Rank #2, has a long-term earnings growth rate of 6.1%.

Hain Celestial HAIN, with a Zacks Rank #2, delivered a positive earnings surprise of 7%, on average, in the trailing four quarters.

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