Chocolate sales in China more a trick than a treat for Hershey

On Friday, the Pennsylvania-based maker of Hershey's Kisses, Reese's Peanut Butter Cups, Kit Kat and Mr. Goodbar, among other rich confectionaries, cut its profit outlook and announced that it will trim 300 jobs. The reason given: slowing sales growth in China.

"Hershey chocolate growth was below expectations in April and May (in China)," the company said in a release on Friday. "As a result, the company has tempered its expectations for organic net sales and operating income growth.

"Macroeconomic challenges and trends are affecting consumer shopping behavior, resulting in continued softness within the China modern trade, particularly the tier one hypermarkets where the company generates the majority of its chocolate sales.

"Additionally, increased chocolate category competitive activity and the accelerated momentum of e-commerce and online purchases are impacting results and prolonging trade inventory destocking."

The company also said it was moderating its 2015 net sales expectation for the Shanghai Golden Monkey Food Joint Stock Co Ltd (SGM) acquisition. Hershey said that recent market visits with sales and distribution networks "have indicated that the slowdown in the economy is affecting many consumers, resulting in lower than expected retail velocities".

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