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SAN FRANCISCO -- Helped by price increases and lower costs, The Hershey Co.'s third-quarter profit rose 30 percent from last year, and the company also raised its full-year profit outlook, according to MarketWatch.
But sales for the most-recent quarter missed analysts' forecast and volumes fell after the company raised prices and discontinued its premium chocolate products that included an alliance with Starbucks, MarketWatch also reported.
The chocolate bar maker said it earned $162 million. A year ago, it earned $124.5 million. Sales declined less than 1 percent to $1.48 billion.
Analysts had forecast Hershey to earn 67 cents a share on sales of $1.53 billion, according to FactSet Research cited in the report.
Hershey boosted its advertising expenses by more than 40 percent over 2008, to win back lost market share and better contend with rivals Mars and Nestle. Last week, Hershey increased its advertising expense target to 50 percent. The marketing push will coincide with the launch of Hershey Bliss white chocolate in December, along with the introduction of the company's Special Dark, Almond Joy and York Pieces.
Hershey said U.S. retail takeaway for the quarter ended Oct. 4, rose 4.8 percent compared to last year. The gains measure sales at outlets accounting for more than 80 percent of the company's retail business. U.S. market share was flat in the quarter.
Gross profit margin was 39.7 percent of sales compared to 33.6 percent a year ago. Some of the improvement came from manufacturing facility closures. Hershey plans to increase production in Mexico, according to the report.
Future strategic moves by Hershey are reportedly being weighed by the company's board in light of Kraft Foods' pursuit of U.K. chocolate maker Cadbury. Hershey is said to lack the financial muscle to make a bid on Cadbury, according to analysts.
MarketWatch reported that since the U.S. accounts for 85 percent of Hershey's total sales, the company's growth prospects are currently limited compared to other confectionary makers.
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