The Hershey Company (HSY) 1 Aug 242024 Q2 Earnings call transcript

Greetings, and welcome to The Hershey Company second quarter 2024 earnings question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Nora Naughton, Senior Director of Investor Relations. Thank you. Ms. begin. may you Naughton,

release Thank our second joining session. quarter the which our everyone everyone. management our The both remarks, I today Hershey had of press read to Company's XXXX available chance listen you morning, to us prerecorded on for are for hope and website. Good earnings Q&A

transcript of addition, have posted we remarks. call. of conclusion the Q&A we a session, prerecorded replay In today's also will and a post At this transcript of audio live the

update Please risks session, Actual statements performance. of based future detailed today's SEC note materially and we may events. A risks subsequent such that press these are company's during today's company's statements financial that be from Q&A These results expectations make The release obligation could those projected. found listing on filings. subject and including uncertainties the and company and forward-looking can undertakes the to in statements, differ regarding various and assumptions to no operations uncertainties.

please non-GAAP considered believe a are financial refer morning's the for included is measures to isolation this not the be as for results note presented information in with financial accordance GAAP. certain intended investors. Reconciliations information or release. we useful information to provide may substitute that that in GAAP press Finally, presentation The of we to this in

Steve Hershey's CEO, Buck; Vice Michele CFO, are and and and today Chairman Senior me Voskuil. Joining President Hershey's

turn will to I the that, With question. operator it over the for first

Ken with first Instructions] JPMorgan. comes of question Our Goldman from line the [Operator

you're probably somewhere Melissa the think in And Poole, call. I

increased the on you help Thank there. congrats your role. you're new Nori, And over I think your years. all still for

there the as X% North this shift. quarter, was from from around X% retail X% to American lower Halloween ask, you within I and inventory a wanted to impact Confectionery mentioned,

I year, seem have that real confident which effect in impacts these understand. no You the will

haven't underlying red least isn't is, to But benign this food, just asking ask investors always there orders small my is question I'm a if news? because reasons. in flag been it at And delayed for historically for unfair destockings

guess, I end-user demand. they're, Sometimes softer outgrowth of

curious just the not commentary. So which delays implied your gives what confidence relationship seems a between to by and there's be demand, you

to want take you that? do Steve,

happy there's to. last era challenges. and actually bit seen of quite Yes, we've COVID around chain in partly the I'd the mean few I based as been be volatility inventory levels, years, on supply a

the And more Halloween been so it's we're is I now what which more third to is think in more the shifts a seeing second traditionally, quarter. than in the reversion quarter way

from our collaboration. prior have year hand. already. but -- visibility We've of lot A And change strong of orders retailer good season. so for into in Most we expectations the those got the seasonal are orders

see to so red as We order reversion I think look traditional at see it flag. And as it, more a pattern. a a don't as we we it

taking you're this Okay. quickly, Can us so? can announced us recently about covers? give elasticity The doing now, it categories pricing of And And then I to a be the one through pricing. your which you you're to of degree you wanted products sense ask few comfortable increase? the of walk some magnitude which the to that given right perhaps

Absolutely.

the not now. seen we of all levels before kind we for sustainable, period higher have is be historic of than cycle. prices cocoa historic recent And cocoa current some experienced price do future know, the we've we you as pricing prices time believe that will So while this believe

continue to hold it measured We think environment. well absorbed seeing been a pricing will been category to approach historically on. We tougher pass has lot We've do up believe rational. inflation approach. we're need be. the Our already, of to very we a of on in but it's take we fairly the think And this it some

to are So, where confidence. of overall, our we what gives portfolio. into to not a but take internal us consideration that's will robust have what lot the factors process price going do we determine We a approach entire be,

to X about of points getting be price realization. X net will We

we of at pricing. the lot think want a much point, being don't more so around very And into go we to customers. into announced, is was point, shouldn't competitive this still It too detail. it At into a the sold out recently there and go from specifics perspective, we this

bit have little are recent see seen elasticities, our We is we'll assuming we in which price that historic worse increases. a than

that right forward. as approach plan going on business think the we that's So the we for this

Lazar of with question Andrew comes the next Barclays. from Our line

little share in I chocolate. particularly everyday think, Michele, I Hershey year. though a in dig lapping to even on market core have share losses I core trends been expected, items, than know is bit more share in some last chocolate wanted trends in weaker,

to sort was But And additions. guess I mark return capacity I year, know of such. I last more thought normal of more there would commercial activity of innovation, was focus and on levels a more a year this I in-store --

I'm So better those to incremental get of you'd albeit start inflect, in light to particularly losses? maybe is start you your think And those share to pricing, expect driving intent understanding of trends trying when pricing? to take just a justified what to see

Yes, absolutely.

to year, say planned half in to due second of had be quarter I'd along All the encouraged growth are weaker roughly for QX So we first that a to stronger had than lapse anticipated range. our category expected be that than well we or the us also continue of better see all, programming. X% as QX. And takeaway to we as timing we as the first both half we

Given shifts both to QX that we we that also and And to shifted year saw quarter, of certainly, was from that programming on rescarable we where some a prior then was shopping an QX. That continues share perspective the in in at some where in seasons, programming were sweets were be lighter bit sweets. category of said, had share buying they strong. pressure I what QX, perspective. under-index look also we the is consumers from than and and and certainly a terms area we a that areas the If timing of anticipated

we back biggest reduction key look well And retailer significant spoken we we as trends launch developed. in of offset kind club as about -- that merch, course, that in continued have reduction had As the the with in pressure which reverses factor pressure where of less weakening is innovation hit the channel cetera, to in an us the incremental finally, the take home that. We uptick new back saw Shaq that really with C-store then the -- of help of past, we're some particular half, half. the think forms, in going C-store we those et given at at

we'll going progress the of we So as look we visibility position merch half, the key the strength that we for and be us. a have we have going we're to retailer, perspective, feel have Certainly, good Reese's big programming Reese's, sweets. in on back in several our plus know that into from the reduction an at at advantaged about retailers. that lapping innovation That's to

also share seasons. a second And big half first are half, we to look player at season, as we

back Easter have strong half. with First we a to the season, and half in seasons visibility the short had weekend

So we well. know share that that, drive as will

sort you're in the that, quarters was merch quick having, follow-up like that's guess the postmortem impacted will? just if last of what couple of kind retailer I the you reduction on And on a that Great. of

of because these lots swings of -- maybe then put an of retailers direction, some out it interruption, different far you to sort item. will, too such -- in the it's sense Typically, impulse kind and store have to figure of if things the make that key across one of pendulum does points

So any lingering so I'm just that like that you not expect curious or much? effects from

where I say go would things, to they that sometimes think that a that there's we're while I were, bit they do more they down I extremes, think neutralize. don't I they would more would the more. do those say, say back neutralization think revert middle -- and seeing I things to

Howard Our question from the of Bernstein. next Alexia with comes line

disappointment Can those because question start on run relative the And quarter Halloween we just on being timing incentives wants that expect happen Does maybe going or a plan, inventories to to what imply should payments the shipments that the for the retailer will forward? incentive with something this the have comp of we of down? down.

with driver incentive biggest is the The are side on expectations our from tracking what just Yes. year standpoint. full a

right we the any And now. up benefit incentive into we're through flowing year-to-date the quarter, and -- the outlook that benefit for true comp that's at we where -- and so at full year, that's we're the

quarter I same, -- Okay. that Obviously, year. this quarter minor back to But does the sort there's was disappointment relative the trying and reduction next mean normalizes? in full was a comp a only year bounces of just or I is the guidance this to that expectations. mean

just, No. are it's underneath bounce are of different that where say, numbers. have the there. We the objectives things, parts There headline and incentives And to than portfolio expect wouldn't structured, other goals. There's it different back. goals more

So been change. may calculations the underlying some numbers -- though we've change that incentive can not headline even of the much,

quarter, fall say, at it would that step to up it second continue look through back. We're we I down as to so will the come true quarter. And back expecting every half. for the not it I a as

an the Reduction on a I in does impact. mean impact have guidance meaningful comp.

it. Got

XXX-basis-point Perfect. you this expecting full quarter, the obviously, on mentioned decline you're margin, that And a then the gross year. still Okay. for

Presumably, it timing cost cost last wasn't input that because you I favorability. input on? about had talked year. you cocoa the quarter, in that Which locked was This end of at thought

input about curious cost. dynamics on just So the

derivatives things hedging. that have are there second There of quarter. One inside mark-to-market did we our a couple for for the is some in movement of

it's flows segment always periods, so for mark-to-market not And reporting. have, past. the that current the some from a change through We

always, because That's use the in to performance, varies input to this came plus It favorability one hedge, pieces. that was we of quarter-to-quarter, we to through but the had business volatility instruments relative commodities, of costs. of In some and the case, that mix there the and tools predict. that hard as

cost small some on made That ERP we positive changes a well. have but system also products. impact of -- way the our big as to didn't slightly as quarter, match We to and the part

as at those look to those back at them come back all look half. we based, timing and we in see expect pieces, As so we the

next Our Bank of Bryan of from comes with America. line question Spillane the

year a I balance I question to why normal a the you're is to maybe over elasticity. think going asking and just be receptivity all the of price consumer or Michele, of going increase we're guess So get

right? look your Pepsi own that right, doing clearly if And I context in well. not the at shift, stores merchandising good. point price $X front Mondelez point instead right, too Convenience of was as on priced cutting of, wasn't is it's stores, a on $X prices, Frito -- get say you doing club value in Dollar stores, results, is high. There a people's the a to they price because very eyes. lift of trying well.

it down demand. the seems other like of a just are snacking So start peers stimulating lot to adjusting maybe

another So how the you trying take think just of in about price increase? context that to

So certainly, certainly, focus versus, some That we the other experiencing pricing, on we're the outsized put I'd said, consumer. as say, together we really do peers. inflation

elasticities, pricing we have elasticity recent price increases, levels. than As our better historical at we look historic been

a So in putting in we conservative seen place the more we've elasticity are past. on than assumption

That said, at and opportunities we those portfolio the price amount with we've lean at in range need of a got the portfolio analysis price. We've be not the under for we've key we our across pretty to and $X to the really to increases also made price portfolio a think places benefit across choices significant point. And the where of take about in on to look some approach price will consumers. points a lot that offer right chosen of we work that's surgical

bundle precised from Seasons points then both optimize look total to the the value as a perspective but right and in know provides includes reinvestment value, provides We point, reinvestment value because promotional well. continue also of innovation at we also value price and price

of approach good is kind holistic it. So makes that about us feel what

could Steve, then, And I Okay. put one just if quick follow-up.

XX gross margin mentioned, got prepared pretty you're in laying should year little If or cocoa 'XX, factor you're in we for beginning about to assume cocoa? I we remarks, think start expectation So and should -- locked a for might bit moves have it this you've the in around, versus the on more about? for think if it's been you visibility 'XX think of 'XX. we that much a

Yes.

cost this quarter, in 'XX the caveat say like some go supply For year. locked only this mark-to-market potential movements I well on pretty cocoa I'd is and cocoa. through that cocoa say saw still could itself, this in-quarter part the some would last for year. And largest we But we're of there's for

get there's we been price as expectations versus where surprise. price the course, for That's, Current of year, about. up mean is in still share they more talking into we're next increase further no to the necessitating get we past. As significantly cocoa year. we'll of about next year, the course, I have that

So basket standpoint. this year, more to 'XX. But pretty commodity from on confident we a where we're come about for feel sitting

next comes with Our Palmer Evercore line question David ISI. from of the

Great.

Just a the on on previous quick pricing. follow-up question

what consistent American in mentioned results Are You the price North that. confection X% increase. check you 'XX? wanted to with for expect your I just there? to Is issues X% for timing there that would reported on

about to about, merchandising talked of acceleration? important separately, What least wanted you've North Club then maybe channel some and is the Shaq, the the with stabilization imply American that And new temperature. that the at that confection. that and with get you seems acceleration I second just the then retailer? stuff commentary restoration talked half that your and or most key to guidance your What to about, Reese's, expansion into in

phased Sure. pricing side, can't price to When is on net for year take -- be going in. increase we you confection. take X%, This the for the full the X%

in be later will phased parts year. Some this

an will year. impact parts -- be Some have next

the way. all don't is in digits we about way the mid-single overall that But look So to it. take think XXXX

guess second lap X the half resets of to merch was in large some going Yes. I on drivers, biggest the significant. retailer is on certainly, if and the I

put into should and foremost, So I like. really good that that would and we visibility have what look first

continued one strong season, Also that sweets then visibility then large And also the those the Secondly, lastly, the the shift continue and acceleration, seen the really into for salty, continued the but sell-in to salty, and has differential. haven't back is And momentum, of big seasons. but say of impact I'd regaining is in drivers. that SkinnyPop strong, business. that Certainly, the innovation salty momentum the have we expect about to much remained we we talked half. see seeing Dot's on

from Our BNP line comes question next Gumport with Max of the Paribas.

C-store up In particularly back dynamic months. expect and the may discussed it over remark color hoping color you about on consumers weakness. pulling on prepared bit seeing how long you're really I spending what a bit X then the there, And get was persist. more this around pick seeing remarks, discretionary your more also a on to you last

some choices discretionary forced focused I pull their more think spending, getting and best where they're mean Yes. consumers they times I value in the on even are to make on can. back of that

of out to so where go And shifting purchases, normally not their where they may their way are do making of some that. they

into times, I mass, cetera. away we're that's And they're convenience some think seeing store doing. during the I why those shift think this is more et from of dollar, something

year. we've think part that to I And started first see of this the

and confidence channels. as I the see that to think year. continue right continue expect can I would shift all do to we have We through those offer across we that offerings the

we to do our business is One see will that. of lap and/or ability that And we stabilize in grow. our that, strength certainly, as

regard of with or that price historic business. around expected commentary And the what's you to that color bit level? be more then confidence X Is around the the confection on it right a increase North then just with X.X. American on elasticity historic elasticity giving And will the that right

what and we pretty on we a feel is -- right that's Yes, It right. that X. based that use we data good model now. that the say would estimate have, we our around And for you're points good

in that's building the that price We versus isolation. in in some And we've conservatism really been of are where for past.

increased cetera. things customers, in et innovation, help to other that activity improvements seasons, et can relative are There cetera, to like at offset levers that

from of comes question line Tom with next Citi. Palmer Our th;e

the question. for Thanks

your You not how about to in I inflation. view sorry, announced cocoa -- of just the And So current are of pricing round context prices mentioned wanted sustainable. that you're you longer-term longer-term pricing? covering understand the or thinking that

prices view where migrate So of is cover your of pricing this round cocoa term? longer kind of

regarding So to we remains view place. That as But in we've that pricing before, hasn't linear. commodities as our changed. strategy discussed totally cover don't

coverage. the there's when up, price automatic in an goes As

if would prices you that this want Steve, fully and assume look to already not at in of pricing anything we've by fact been have So coverage we for we be a fair cover I'd saying -- mentioned where the 'XX, to that assumption terms that? that start some add to will inflation? have

Yes. No, that's right.

We continue to levers. many manage pricing of as one

the of And so to reduction volatile. at all we've at we're kinds in also formulation. talked levers looking cocoa about productivity. at Still cost price. looking We're We're manage looking past that very

we today this where current the flash year-over-year even prices earlier to I as a was where kind year, of given down ahead pretty piece. from it's future, and if it's before, still significant installation it is took and it And said very

so it's we'll we're we term, mean that action to that total step. And this covering pricing by levers steps a address. all It's the other expect in not And going first basket take to already have itself at help. the the long can you across will but cost, good

to we be there's believe And visibility recently, greater time in there's harvest, know any also much significant there from a now. we'll continue pricing. monitor some news positive is impact bit in cocoa the of pricing but which we won't Certainly, been fall until

Okay. quarter think other big progression and a timing third the earnings puts thinking underlying of takes we cadence, in on about trends? any maybe kind then some the gross the about just is but any shipment as of help And fourth margin of of terms quarter kind factor, the obviously, sales the help of maybe or versus

Yes.

the expect at to front half, tricky, back -- back little going see but just half, AAA more more across we savings. to as I if if we're probably versus the say, go the a look quarter-by-quarter, you maybe it's half On the look

that the some impact back and through see some half that on $XXX about that of we more year. regular we'll the of think track of our most call for saying back half We're for earlier half. We'll have first of target right that than productivity in that the full but we the saw on there's loaded, come I come profit. gross to been We've million said does CI that, in

last that be half back had in incremental year. the also costs some of lapping We'll we

Some items and the Most related in reverse [indiscernible] of QX. warehousing was timing of to so we expect would forth. that

back will others but So reverse I more of in see think the benefits those we'll the over continue QX, half.

little On the We'll slightly have about seasons We'll have naturally inflation. sweets of mostly us from have that reversal and timing Again, growth, a gross items and back margin also margin. commodity bit bit in seasons other more as in more some makes sweets mark-to-market standpoint I mix side, we the half we'll a growth talked more margin, the of think QX. and coming dilutive about, and little a dilutive other to that

Our of Moskow line comes the next Cowen. with question from TD Robert

if know sales anything big to to stand how Has going going Where And have wanted another this a I because you support. as is increase how this costs you could do marketing marketing think last increase on to your account, was plan for on changed? to of year. kind much of into the these your into year? for that was marketing take about you just There think you're you 'XX? get do relative to into -- XXXX, incremental I increase elaborate and thinking year,

Yes.

we in we versus support So planned. our change had marketing significant a see what don't

And sales As up Yes. as we about next to think growth. in this with our year... we look line year, still

year, to in line also sales. match with not down. Next enough far We're I'd roughly expect

we'll sales that later match assume think get But planning planning doing standpoint. least a going year, All for year. I at get a our to game it's the I we'll in from what of we're from details more next standpoint,

line Our Salera comes of next Jim from with question the Stephens.

about for remarks, pressure. improvement category. probably seen the you with the has then the half promotional obviously, salty, Dot's SkinnyPop kind and But the in as activity And category on prepared some back in the into coming strong more a year. Michele, trends talked whole salty of of

reaccelerating? half and puts the maintaining then confidence of through the year walk takes and the back you what for in maybe you on can momentum gives So Pop Skinny Dot's

Yes, absolutely.

distribution. depth we've certainly, of continue start opportunities, more geography, depth have are I'd our continued it Dot's. space still There it's growth by tremendous on we on distribution to a within So expanding on Dot's, is of see a shelf, lot to whether store upside by saying given whether on velocities.

and and have relative also support innovation strong in recent flavors. types also of continued investments marketing relative to And both dots to Garlic. Parmesan we then launch One pack example,

marketing because the So we in opportunity present continue has been phase. the brand of to that on still kind just really levers introductory have all still Dot's

As category. yes, I been say, pressure about there's Popcorn, some I think on would the

some to pack seeing innovation well are the we size And as some lapping the stepped-up feel stabilization that relative marketing category. the some combination recently on investments have We of to as last continue SkinnyPop well which about we more up also of lap concerns we dialed year. in good flavor, and consumer opportunities from as with softness

instead Or there Dot's? cohort, trends substitute to something there for Okay. maybe a particular ready-to-eat that preference or eat like little pretzels just on a little bit opting something relative softness down out part to like is good That's of the with another consumer the helpful. like trading popcorn. with bit the where the for And popcorn? Is are there, consumption drill of

we what mean was satiety value the total impacting factor was I Yes. uncovered proposition.

we're quarter. And of softness last see half some the so to really now at we're through the on as to that back year. we point see a we and starting where lap that's head And what started second stabilize it

Our line Lavery next with Sandler. of from question the Piper comes Michael

the average months having covered half estimate on kind an for reasonably but for you cocoa. too than year? imagine you're more now that through would kind halfway don't maybe through year we assume of of than the to halfway at XXXX -- typically touched or of You ahead, be XX XXXX more want for looking specific, with some and least sort I'd of coverage

in supply? on looking of I related better And guess patient sense that Maybe just securing how is progressing? part of maybe, of of XXXX to you Or there to little report that would ordinarily rates? you've sooner should focused preview give typical product be the February securing chance put plans are this for maybe any terms the question news? much when know normal? an Or calendar might than cycle kind you more when in year. kind you of got next Is the I update that, a XQ expect fall, give a we is, later on for together, just you how

Sure. Yes.

right, On the around really specifics hedged hedging, how XXXX. on we're can't you're out for I color far give

our said, hasn't changed. I policy As

And so we've got some volatility. still the guardrails. It's fair to in assume we've market got but XXXX, and some the level of we're coverage watching

monitor we'll so to, as And process, and through continue coverage normal appropriate. our that take

when we As we to year, able color the more we'd color do but see we be how we're will on, sitting much on be quarter the get we more a get have bit would our we other what little to to visibility the later in we example, see variables provide as for into would We'll visibility some how able we lot Again, provide there, hope. give well. and rely to love once I here, as increases, on. third That Copeland depend can sit visibility you a call to the hope by as be have

other way that about far you about managing impact, influence very as diversifying do cost just known, you And it how the to or might any think a optimization? away as chocolate specifically portfolio? helpful. think might well more bit obviously, pressure how That's Maybe does little cocoa the Okay. that is portfolio from anything

expand snacking categories best portfolio particularly meet our We broadly And looking that more consumer in to ago. the always a we're salty core to know, across as at are mean into so with strong love -- we're and you decisions years I leverage launch we've made in. our with needs. capabilities our few snacking that the

across optimize -- creation. demand also We our our try chocolate look even and portfolio our and

We more and goal is. consumer parts always have others. the may have certain have cookies where to like our But and the and of cocoa is parts green that portfolio that go certain chocolate,

of Wells the comes Fargo. question Chris from with line Carey next our

there one first a cover was have just pricing on the and statement step then to just back follow-up prepared the the on levers, was I half. levers, the that regarding clarification remarks, a in the inflation. Steve,

now I the where assessing just that pricing many or is couldn't you're in to then And offset the your incremental before have as toolkit savings. regarding in some effort the the is of will Doesn't like perhaps source taking being one other levers implication just productivity, key put to price that's if inflation, reformulation, pricing tax be product was toolkit, the manage pack, maybe most pricing of right inflation. tools whether far tell a as even savings. feel marketing market

Where destock in but in had coming the year, there for the the X-point to -- lot point you've of seems kind is QX points sorry just innovation? Or any the work X back in prepare time of the then So of for right of the half the visibility X about now? kind this. back question, is And is seasonal. Is half? a that rest of going back of long the just

Sure.

looking our We're really On this question, looking at just always the your We're at first cost. at normal is of part strategy. pricing. the We're looking market.

the be -- we're weren't "Hey, this say, be looking intended is so trip a to waiting this levers. we comments looking pricing, pricing, at and always the will to isn't at And and -- all we'll

So that. to address just

with about In all of which would a value of couple earlier, underway, I initiatives terms as we've bring in are. lot bringing increase, talked We've big years. of got the but where is in working We that, in want PPA some to we're we're next to past, some to retailers this Michele they going are, to bear of one. say sure focused -- are price but in contemplated we consumers other collaboration that the things that of said a levers, make on

of all be technology of transformation savings focus. one those one also like levers use that things the the program of investments. the then So cost production pieces, the some to continues efficiency we that And back through to of drive off a driving the can P&L, and

And attention. that are then question are ask of span those tools, just last the repeat to wide So getting piece. on half, ones you back that of lot was your but a

points there's of basically shipment proactive X incremental X-point Or of retail a innovation the is initiatives have? any reduction just point is question about back in of remarks. the being in or to The half is can in prepared get I highlighted that roughly that other visibility you QX? this that of The rest that, seasonal.

a was there because full with current tell about couldn't into retail the in be should year. inventory I line levels comment

rest of of know were some didn't I getting So back, the other or things. shipment and that if you the visibility

increase retailer guidance half inventory. any doesn't require back in The

at be now So any the that expected like level have inventory. we're I but typical, of said, be we expecting retailer a in end not at. The we're would year increase might to

as earlier for far have half you as some drivers, of we on of And the those well. and back touched as some them

have of international role. fourth more in ERP a season the a in will last relative businesses. have half We have implementation last innovation the the as there will first will mentioned quarter year. We'll to in some remarks, couple laps the easier given well of We play prepared easier salty some

in So do standpoint back in the the those we can things that business are us what confidence half. give from a

of line Dickerson Our next Rob from the with comes Jefferies. question

quick Maybe question for just a Steve.

outlined those levers, you've the in of clearly, Just in million mean savings. right, gross terms $XXX I

I through think 'XX. it's

are needs what we And reinvestment the given preplan offset that that of a there have the So those costs? already really. I'm flex see savings maybe just cost been those is bit not but well, do, cocoa can situation. clear Or say, in of question. some curious, first to kind help just That's elevated earmarked? you we'll kind there of more Like little

the Yes. absolutely. cost I'll on focused say side, we're very

work And that. ongoing work off now ERP can some as and we the savings so of look the even back the the through we and moving leverage productivity past through look as we transformation of

So said, -- costs focus things cost all helping savings as to of we do from some a are a those what us XXX can that on we're on And net standpoint. expecting help over period. savings impact make we

net hit XXX after not reinvest then to XXX portion. it's So reinvestment We P&L. the want

like. situation guess $XXX mean I I say $XXX to the take maybe could just sounds million I would Yes. the million cost you because it changed? like, like

just felt program put went like would I place. in we cost savings Well, down we that pencils once say we Yes. on

believe the to more. time savings. We continue pressure the me, look for up is cost all all to And find

enough. Yes. Fair

of Okay. and And discretionary mean, softness a on kind of some confection around business, kind seen still ongoing of because growth I of kind ongoing guess, much on kind Michele, of U.S. of the the chocolate because, then ask the smaller we've argue just I which spend clearly, suite it's and one guess, somewhat still a side a question could tremendous I clearly broader market. of discretionary you so Cool. this piece --

any year? all. So like shackles name be I back you have then of the the to three, an maybe would You could half names, dream of non-chocolate broad increasingly maybe yes, is acquisition we first, maybe you And it the interest. two, there through that That's could to but be shifted consumers opportunities do X? launch area like don't of? of just be think why to then expected maybe how guess, kind have get And confection kind of as

Yes.

all, emotional to chocolate. We segment. much to that kind and and of the do say innovation in we're dress sourcing in of release appear fun, be growth -- growth area chocolate is that the that been And the first of frankly, from believe some there's that a due still factors non-chocolate of seeing around growing. So lot doesn't news there's I'd

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further comments. time. floor this There like for over at I'd are Nauman the turn to closing Ms. questions to no

catching your us you with much the a of Thank look joining up to day. so rest coming all this weeks. you morning. and for in days Have We forward great

This teleconference. today's concludes

and time. have your wonderful participation, this your disconnect a may You at you for day. Thank lines