Hershey sales rise 3% as convenience-store demand weakens

Hershey Company net sales rose 3% in the third quarter ended Sept. 27, while sales of the U.S. candy, gum and mint category in convenience stores (c-stores) fell nearly 5% in September. The category figure includes several Hershey brands; Hershey did not disclose a company-specific c-store decline.

That divergence puts pressure on Hershey’s distribution economics: fewer c-store trips can reduce unit throughput, while shifting spending toward mass-market and online retail changes where customer demand and inventory must be managed.

What did consumers do?

On Friday’s earnings call, President and CEO Kirk Tanner described c-stores as a particularly challenging sales environment. He tied the September slowdown to consumer behavior: “As September progressed, we saw consumers become more deliberate about spending, particularly in channels most exposed to higher gas prices like convenience stores.”

Tanner said consumer caution persisted into October, although Hershey’s categories were holding up comparatively well. That claim was not accompanied by an October sales figure or a c-store comparison, so it remains a management assessment rather than a measured rebound.

Takeaway: Higher gas prices coincided with more selective spending and a nearly 5% September decline in the c-store candy, gum and mint category.

Is this a category problem or a channel shift?

Senior vice president and chief financial officer Dave Hulays said shoppers were spending more at mass-market retailers or online while c-store sales declined. In the question-and-answer session, Tanner described c-stores as an outlier among the retail channels Hershey serves.

“When we do step back, we see it as more of a channel and trip problem, not as much a category issue, and so we’re focused on value levers: innovation, price pack architecture, surgical promotion,” Hulays said.

Hershey’s three levers address different parts of customer economics: innovation can add purchase reasons; price-pack architecture—the range of package sizes and price points—can match different budgets; and surgical promotion can target discounts more narrowly. Broad discounting can reduce realized price and gross margin, but Hershey disclosed no promotional-cost or gross-margin effect.

Lower store throughput can leave more inventory in the channel if shipments do not adjust, hurting inventory turns; matching shipments more closely to demand can limit that risk. Neither scenario is a reported result.

The NACS traffic measure covers all c-store transactions, not Hershey, so it does not establish a Hershey share shift. Falling traffic may weaken supplier channel power, but no retailer negotiation or shelf-space data were disclosed.

Takeaway: The evidence points to a channel-and-trip problem, while the effects on gross margin, inventory turns and market share remain undisclosed.

What do NACS’s transaction figures show?

NACS, the convenience-retail association, reported that total in-store transactions across convenience retail fell 4.5% year over year in the first half of the year. The measure covers the channel’s total transactions rather than candy, gum or mint sales.

At the association’s annual conference last month, Chris Rapanick, managing director of NACS Research, described the trend as not pretty. His assessment and the measured 4.5% decline reinforce Tanner’s description of a difficult c-store environment, but they do not prove that gas prices caused every lost trip.

The reported figures cover different companies, categories and periods:

• Hershey: 3% net sales growth for the third quarter ended Sept. 27.
• C-store category: Nearly 5% September sales decline for U.S. candy, gum and mint.
• NACS: 4.5% year-over-year decline in total convenience-store transactions in the first half.

Taken together, these data establish broad c-store traffic pressure and a September category contraction. They do not quantify Hershey’s own c-store sales, market share, average basket or the effect of gas prices, because the source discloses none of those measures.

Takeaway: The channel data supports a traffic headwind, not a measured causal link between fuel prices and candy demand.

What could improve?

Consumer confidence rose in October, and fuel prices were down from the prior month. Those developments could ease pressure on convenience-store trips, although the source gives no confidence-index level, fuel-price change or subsequent sales result.

Tanner said he expected the c-store business to soften with gas prices but still viewed the category as decent and robust. That is an outlook, not a measured forecast, and it sits against the nearly 5% September decline and NACS’s 4.5% first-half transaction drop.

His optimism therefore rests on category resilience rather than evidence of a traffic rebound. Hershey’s innovation, price-pack architecture and surgical promotion will test whether suppliers can convert fewer shopping trips into purchases without giving back gross margin; the company disclosed no margin or inventory-turn targets.

Takeaway: A fuel-price retreat and firmer confidence create an opening, but no post-September sales recovery has yet been measured.

If fuel prices remain below September levels and October’s confidence gain translates into more c-store visits, Hershey’s convenience sales could recover from their September low, though neither Hershey nor NACS has yet measured that turn.