The Hershey Co. reported depressed quarterly revenue in its fourth-quarter earnings report released this morning.
The company blamed the revenue shortfall on higher demand for bakery and meat snacks, which hurt chocolate sales.
The Derry Township company also said it will acquire meat snacks maker Krave Jerky. It did not disclose a deal value.
Hershey’s net income rose to $202.5 million, or 91 cents per share, in the quarter that ended Dec. 31, up from $186.1 million, or 82 cents per share, a year earlier. Revenue rose 2.7 percent to $2.01 billion. Analysts had expected average sales of $2.07 billion, according to Thomson Reuters.
“Throughout the year, retail store traffic and consumer trips were irregular,” said John P. Bilbrey, president and CEO. “Additionally, increased levels of distribution and in-store activity of items such as salty, bakery and meat snacks, by both mainstream and newer contemporary niche manufacturers, were prevalent throughout the year and drove broader snacking category growth in 2014. This adversely impacted purchases of non-seasonal candy products resulting in net sales and operating profit that were below our expectations.”
Hershey said the deal to acquire Krave Pure Foods Inc., based in Sonoma, Calif., will enable the company to break into the meat snacks market. Krave manufactures Krave Jerky, a leading all-natural snack brand of premium jerky products.
Founded in 2009 by Jonathan Sebastiani, the company is a leader in premium jerky, the fastest-growing sub-segment of the estimated $2.5 billion U.S. meat snacks category, Hershey said in a news release.
The overall meat snacks category is growing at a double-digit pace with a compounded annual growth rate of about 10 percent from 2010 to 2014, the release said. Hershey said its well-developed supply chain will help further grow the Krave line.
Terence O’Day, a senior vice president and chief supply chain officer at the Hershey Co., sold 12,500 shares of company stock worth nearly $1.4 million, according to a filing reported Jan. 20 to the U.S. Securities and Exchange Commission.
That was the largest transaction over the last week from executives and large shareholders at regionally based public companies.
O’Day, who had exercised options on those shares at an average price of $51.42, retains 25,507 direct shares, according to the filing.
Shares of the Derry Township-based chocolate giant are sold on the New York Stock Exchange under the ticker symbol HSY. The stock has been hovering around $110 per share.