The Hershey Co HSY

The market soured on Hershey (sending shares down a mid-single-digit percent) following assorted first-quarter results--0.5% organic sales gains (as a 2.8% price benefit was offset by a 2.3% pullback in volumes), 90 basis points of adjusted gross margin improvement to 46.6% (reflecting higher prices and increased efficiency savings), and 20 basis points of contraction in adjusted operating margins to 23.1% (after ratcheting up advertising and marketing by 4.5%). Before the strains from COVID-19 were felt on a global basis, Hershey had expected first-quarter sales to be constrained by one less week in the Easter selling season. As the quarter proceeded, this was compounded by the closure of the Chinese market in response to the coronavirus pandemic during the new year holiday (which drove underlying sales in China down 45% in the quarter, contributing to a nearly 6% shortfall in international sales, which account for about 10% of its mix).