HERSHEY, Pa. - Hershey Foods Corp. on Wednesday announced that it would increase domestic wholesale prices on many of its bread-and-butter chocolate products on the heels of price increases by its competitors.
Word of the increases prompted a late-afternoon jump in the company's stock price, which ended the day at $66.15, up $1.38, or 2 percent.
The increase will take effect Jan. 1, at the end of the company's most important quarter of the year when holiday candy buying typically produces a surge in sales.
Hershey Foods spokeswoman Christine Dugan said the company wanted to take advantage of price increases because its closest candy competitor, Mars Inc., recently raised its prices and because Hershey Foods had not raised its standard-size chocolate bar prices since 1996.
The wholesale price increase for standard-size bars is 10.8 percent. The average price increase for all of Hershey Foods' domestic products comes to 3 percent and will affect domestic sales of standard- and king-size chocolate bars, variety packs, 6-packs, and 10-packs.
"What we're talking about is the stuff at the front end of the store, what you see at the checkout," Dugan said.
Analysts say the company's domestic sales account for about 90 percent of its revenue. The company declined comment on how the price increases could affect sales or revenues.
Analyst David Kathman of Morningstar Inc. said investors bought Hershey Foods stock on the assumption that the price increases will not depress sales and will result in higher revenues for the nation's largest candy maker.
"It all depends on whether the prices stick, because when you raise prices, you have the risk that volume will go down," Kathman said.
The company could use some help: After a six-week strike at two plants and an attempt to sell the company to a competitor, Hershey has reported sales lagging behind last year's through three quarters.
Revenue in fiscal 2001 was almost $4.6 billion, about $1.3 billion of which came in the fourth quarter ending Dec. 31.
Hershey Foods also owns Twizzlers licorice, Jolly Rancher hard candies, and various mint and gum lines.