updated - August 13, 2020 Thursday EDT
American chocolate maker Hershey Co. announced on Friday that it will cut 300 jobs and profits will be lower than originally projected due to slowing sales in China.
Hershey said the workforce reduction will save the company up to $75 million until 2016 and help it simplify the business making it "more flexible to quickly react to changing consumer and competitive marketplace trends."
For this year though, Hershey admitted that its original profit targets would be difficult to achieve.
Anticipating weaker sales, Hershey trimmed its earnings forecast to $4.10 per share from $4.18, which was already reduced from its earlier profit direction of $4.38.
The company cut its sales growth forecast to 2.5% to 3.5% from its previous projection of 4.5% to 5.5% growth. Hershey attributed the weak sales to its lower than expected performance in China in April and May, where consumer spending has been dampened by the slowing economy.
The confectioner also managed expectations for the sales of the Shanghai Golden Monkey Food Joint Stock Co., which it acquired in December 2013. Hershey is set to buy the final 20% of Shanghai Golden Monkey, but is now reassessing its value, according to a Bloomberg story.
To improve its business in China, the company plans to increase its presence in smaller stores and promote products and brands that give the best returns.
The chocolate maker is likewise struggling with weak sales in the U.S. aside from having to manage rising costs of inputs.
Bloomberg reported that Hershey's shares, which are already down by 11 percent this year, dipped by 2.2 percent more to $90.26 as of 9:35 A.M. in New York, continuing the company's slide.
The company is also shaking up its senior management team, with Chief Financial Officer Patricia Little put in charge of mergers and acquisitions, a key driver in future success, while Steve Schiller, a regional president, was appointed to head China and Asia.
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