First quarter adjusted gross margin increased 240 basis points driven by lower commodity costs, supply chain productivity and cost savings initiatives and net price realization. Selling, marketing and administrative (SM&A) expenses, excluding advertising, increased about 9 percent in the first quarter, less than initial estimates. Advertising expense increased 22 percent versus the year ago period, in line with the forecast, supporting core brands and new product launches in both the U.S. and international markets. As a result, adjusted EBIT increased 9.3 percent generating adjusted EBIT margin of 22.0 percent, a 70 basis point increase versus last year.
The company continues to expect 2013 net sales growth of 5 to 7 percent, including the impact of foreign currency exchange rates. Net sales will be driven primarily by core brand volume growth, the U.S. launch of the Brookside product line in the food, drug and mass channels, as well as innovation such as Kit Kat Minis, Twizzlers Bites and Jolly Rancher Bites in the U.S. and the expansion of the five core global brands – Hershey’s, Reese’s, Hershey’s Kisses, Jolly Rancher and Ice Breakers – in key international markets.
Given the strong start to the year, the company now expects 2013 full year adjusted gross margin expansion of 190 to 210 basis points. The annual increase in advertising expense remains the same and is expected to be up about 20 percent versus last year supporting the Brookside launch and innovation in both the U.S. and international markets. For the full year, SM&A expenses, excluding advertising, is expected to increase at a rate slightly greater than the first quarter percentage increase. These investments will build on Hershey’s go-to-market capabilities established over the last few years, consumer insights work in key international markets, Insights Driven Performance initiative and increased levels of consumer promotion and sampling to drive new product trial and repeat. As a result, the company anticipates 2013 adjusted earnings per share-diluted growth of about 12 percent versus a previous estimate of a 10 to 12 percent increase.
“We're very pleased with the start to 2013 and expect to build on our momentum,” continued Bilbrey. “In the first quarter we achieved Brookside distribution and consumer trial objectives. In the second quarter we'll track repeat purchases in assessing our current outlook and will then have an indication if there is upside potential to the brand’s full year net sales target. I'm also excited about the new products launching over the remainder of the year in U.S. and international markets, including, Kit Kat Minis, Hershey's Kisses Deluxe and Hershey's solid chocolate products in China and theHershey's Mais wafer product in Brazil. The investments we're making in our business in the form of capabilities and innovation, position us to succeed in the marketplace and should benefit the Company in the near and long term,” Bilbrey concluded.
top-auo?E??~?ottom: 6.25pt;mso-line-height-alt:11.25pt;mso-list:l0 level1 lfo1;tab-stops:list .5in; background:white'>D. Michael Wege, currently chief commercial officer, will become senior vice president, chief growth and marketing officer. Wege will lead Hershey’s strategic planning, research and development, innovation, and global Hershey Experience. He will continue to drive the company’s knowledge capabilities as well as Hershey’s marketing initiatives and corporate brand reputation.
In addition, the company announced that Waheed Zaman will join the company as senior vice president, chief administrative officer on April 29. Zaman will be responsible for optimizing Hershey’s information technology and global shared services functions as the company expands internationally. Zaman is an industry leader for transformational global productivity in large consumer packaged goods companies working previously for Chiquita Brands International and Procter & Gamble.
Police Search For Felony Vending Thief In Tennessee
Police are searching for a man in Piney Flats, Tenn. who allegedly broke into a Canteen Vending truck and stole $500, according to the Kingsport Times. Police said the suspect cut a lock off the back of the truck and was spotted, by a Bell Helicopter surveillance camera, entering a small, green, extended cab truck with a money bag and driving off. Full article. http://www.timesnews.net/article/9060842/police-investigate-felony-theft-from-vending-truck-in-piney-flats