Hershey Foods Corporation announced a number of steps in support of a value-enhancing strategy. These include a proposed change in the company's name to "The Hershey Company," the formation of two new business groups to capitalize on growth opportunities, and a proposed increase in the company's authorized stock.
In commenting on the announcement, Richard H. Lenny, chairman, president and chief executive officer, Hershey Foods Corporation, said, "We established our value-enhancing strategy and embarked upon our mission to execute it consistently and predictably in October 2001. Delivering upon this strategy -- whose foundation is profitable organic growth with significantly improved margins and return on investment -- has enabled us to achieve superior performance on behalf of our stockholders and employees. The announced steps are designed to further support this value-enhancing strategy as well as to build upon the marketplace strength we've achieved over the past three years."
In commenting upon the board of directors' recommendation that stockholders vote to change the company's name to "The Hershey Company," Lenny said, "We're asking our stockholders to adopt the new name, as this is how our consumers and customers best know us. The new name conveys our long-term focus on Hershey being a leading confectionery and snack company. We're retaining our iconic name and enduring heritage as the key component of our corporate identity."
The company also announced that it has formed two new business groups -- a U.S. Confectionery business group and a U.S. Snacks business group -- in order to strengthen its position within the confectionery segment and expand its presence in the broader snacks market. Thomas K. Hernquist, the company's current senior vice president, chief marketing officer, has been named senior vice president, president U.S. Confectionery. A search currently is underway for a president of the U.S. Snacks business group.
"We're confident in our ability to sustain Hershey's superior performance and to extend our reach within core confectionery and the broader $65 billion snacks market. With the creation of these new business groups, we'll bring sharper focus and energy to Hershey's unique, long-term growth opportunities in each of these markets," said Lenny.
Hernquist, in his new role, will lead Hershey's domestic chocolate and confectionery businesses. He also will continue to have responsibility for Hershey's special retail outlets, including Hershey's Chocolate World visitors center, Hershey's Time Square store and the new Hershey's Chicago store, set to open in the spring of 2005. "Tom's leadership has been instrumental in the success we have achieved through a combination of core brand growth and accelerated new product innovation," said Lenny. "As president of Hershey's U.S. Confectionery business group, he will ensure that we have the focus, strategic alignment, as well as organizational resources, needed to build on this momentum. Tom's group, as well as the U.S. Snacks business group, will be supported by the company's global operations, sales and administrative capabilities."
Further, the company announced that its board of directors has voted to recommend that stockholders approve an increase in the number of authorized shares of Common Stock and Class B Common Stock. While there are no current plans to issue additional shares, stockholder approval of this proposal would enable the company to consider and implement a stock split as well as respond quickly as opportunities arise to achieve its strategic growth objectives. In commenting on the board's recommendation, Lenny said, "This proposed increase in the number of authorized shares will ensure that we have the financial resources to support the long-term growth of our company."
Hershey advanced its value-enhancing strategy during the past year through the introduction of several new confectionery product platforms -- including caramel-filled Kisses, Swoops, S'mores, Ice Breakers Liquid Ice and Hershey's Take 5. New product introductions in adjacent snack segments included the company's SnackBarz line, Hershey's SmartZone balanced nutrition bars, and a four-item line of premium cookies, all of which capitalize on Hershey's iconic brands, confectionery expertise and leading-edge business system.
Momentum behind Hershey's expansion into new markets was strengthened in 2004 through marketing partnerships and acquisitions. Hershey's partnership with Latina pop superstar Thalia, as well as such new products as Hershey's Kisses filled with dulce de leche and Jolly Rancher lollipops with chili, significantly strengthened its presence in the rapidly growing Hispanic market. The acquisition of Grupo Lorena increased the company's Mexican business by over 40%, providing access to the many small retail outlets in Mexico and creating the opportunity to expand the very popular Pelon Pelo Rico brand in the United States. Hershey also acquired Mauna Loa, the leading brand of macadamia nuts and macadamia nut snacks -- a healthy snack segment with immense opportunities to build the Mauna Loa brand and extend Hershey brands.