The Hershey Co. plans to shed jobs this year as it battles higher cocoa prices and sluggish sales.
- The cuts will amount to less than 5% of the company’s roughly 20,000 workers worldwide, according to a Hershey spokesperson.
- “We do not expect significant disruption or impact to our employee base,” the spokesperson said, declining to detail where the cuts would be taking place.
- Hershey is based in Derry Township and has several factories and distribution centers in the region.
- As of the second quarter last year, the company was the fourth-largest employer in Dauphin County, according to a state report.
Why is this happening: Hershey is looking to generate $300 million in annual savings by 2026 under an initiative it calls “Advancing Agility & Automation.”
- The cost savings are expected to generate money that will be invested in growth initiatives, executives said.
- “While this will be a multi-year journey, our teams are off to a great start, and we are excited by the organizational unlock this will enable, in addition to the cost savings that we will secure,” Hershey chair and CEO Michele Buck said yesterday in remarks to stock analysts.
- The company has been facing rising costs for cocoa and sugar. At the same time, sales have slowed.
- Consolidated net sales inched up 0.2% in the fourth quarter and profits fell despite a series of price hikes for the company’s products, according to the company’s year-end earnings release.
- Hershey expects sales to rise 2% to 3% this year, largely due to the higher prices it is charging.
What’s next: The effort to cut expenses for the long term entails short-term spending.
- Hershey anticipates total pre-tax costs over the next three years of $200 million to $250 million, $100 million of which will be spent this year,
- The job cuts are expected to cost between $45 million and $60 million in severance and related separation benefits, the company said in a securities filing.
- The company also is building a 250,000 square-foot factory in Derry Township, slated to open this year.
trend: While the economy is seen as strong — employers added a healthy 353,000 jobs in January — layoffs have swept through several industries.
- The biggest headlines have come from the banking and technology sectors.
