Hershey Foods' (NYSE:HSY) third-quarter showing was a treat for the investors, and the chocolate giant also suggested it has a few new tricks up its sleeve.
The company generated $1.25 billion in sales in the quarter, a nice 5% gain versus last year's third quarter, while earnings climbed 16% to $0.66 per share from $0.55 per share. Hershey credited its performance to new and limited edition products and improved pricing. As Alyce Lomax noted in January, new products such as Swoops and S'mores bars were already doing well back late last year. Since then, the company has introduced caramel-filled Hershey's Kisses and sugar-free York Peppermint Patties.
And the rollouts will keep on coming. In the candy area, the company is gearing up to introduce a new candy bar, Take 5, which combines pretzels, caramel, peanuts, and peanut butter covered in chocolate, and special edition Swoops in time for the holidays. Outside candies, Hershey is planning a major move into the premium cookie area by incorporating its well-known candies into high-end cookies.
From a strategy standpoint, Hershey looks pretty savvy. The company's new offerings utilize traditional candies in unique combinations, bringing new life to old brands. Further, the company is targeting the on-the-go consumer (which basically includes just about everyone) with single-serve packaging and a focus on the convenience store channel. Finally, the move to premium cookies makes sense, since people are probably willing to pay up for top-of-the-line treats, a premise that Starbucks (NASDAQ:SBUX) also seems to be counting on with a new premium chocolate drink.
Evidence is already mounting that Hershey is on the right track. The firm expects 2004 earnings to exceed its expectations for 9% to 11% growth. If it can keep pumping out innovative products (maybe chocolate health food?), the future looks bright.
Fool contributor Brian Gorman is a freelance writer in Chicago. He does not own shares of any companies mentioned in this article.
