There's going to be a new nameplate before long on a C-suite door of candy company Hershey (HSY +0.81%). Just after market hours last Friday -- considered by many public relations professionals to be a suitable time slot to release bad news -- it announced that CEO Michele Buck will exit the company.
This was an unexpected development. After all, Buck has been at Hershey for nearly 20 years, and CEOs at the conservatively managed company tend to stay for a while (Buck herself began her tenure in that position in 2017). It comes shortly after an influential shareholder rejected a pricey takeover bid from a peer, which may or may not be a coincidence. So what might Buck's departure indicate, and could it portend a renewed buyout bid from that suitor?
The long goodbye
It's important to note that Buck isn't immediately packing her stuff and turning off the desk light. In Hershey's official press release on her move, it said the CEO's departure will become fully effective on June 30, 2026. She'll serve in her current capacity, as well as that of chairman of the board of directors, until her successor is appointed. She'll fill her remaining time as a senior advisor.
Speaking of the board, it has appointed a special committee to pilot the company's search for a new leader. It said it will consider both internal and external candidates for the role, and is partnering with a "nationally recognized search firm" it did not identify.
It's hard to know what's going on behind the scenes, but all available evidence suggests a peaceful transition from a leader who wants to move on. One major clue sits at the end of the press release, where Hershey stated that it's reaffirming its latest full-year 2024 guidance. A company in C-suite (or any other kind of) turmoil likely wouldn't be inclined to stand by its existing financial projections, or even mention them.
Crunched by cocoa
Yet it hasn't been business as usual for Hershey lately. Soaring prices for cocoa, the main ingredient in chocolate, are a factor, and consumer spending trends haven't been favorable. The company's fundamentals are feeling the squeeze.
In its most recently reported (third) quarter, Hershey's net sales dipped by a little over 1% year over year to slightly below $3 billion. Non-GAAP (adjusted) net income suffered a steep fall, tumbling 13% to $654 million. Both results missed the consensus analyst estimates. As if such dynamics weren't discouraging enough, management also lowered its full-year 2024 guidance.
NYSE: HSY
Key Data Points
Hungry would-be acquirers often swoop in at such times. Just before the December holidays, it seems Hershey's candy and cookie peer Mondelez International (MDLZ +0.83%) made a preliminary offer to buy the company. The bid amount wasn't made public. According to media reports, it was rejected by controlling shareholder the Hershey Trust for not being high enough.
Steady as she goes
Coming as close together as they do, and at a period of strain for chocolatiers, the Mondelez offer and Buck's resignation may make investors wonder if big changes are afoot at Hershey.
I'm not inclined to think so. Again, the CEO transition seems to be going smoothly, not least because there's clearly no urgency with it (as strongly evidenced by the mid-2026 departure date).
As for Mondelez, since making its offer, it hasn't come back with a revised bid -- at least, not a public one. That company also maintained its existing dividend policy and announced a substantially enlarged share buyback program -- not typically moves for a business intending to spend billions of dollars on a high-priced acquisition (Hershey's market cap is currently almost $32 billion, a big figure for even the best-capitalized behemoths).
So I feel there won't be any major surprises coming from Hershey's newsroom anytime soon, and I'd fully expect the company to continue operating as it always has. That might not be an ideal strategy for these challenging times in its industry, but it would be entirely in character for this conservatively owned and managed business.
