Restructuring among Big Food companies continued as Hershey announced Tuesday it would cut thousands of jobs as part of an effort to boost operating profit and drive growth in its core snacks business.
The announcement came as Hershey CEO Michelle Buck officially assumed leadership of the chocolate maker. Hershey said the job cuts would reduce its global workforce by 15%, or about 2,700 people, with most of the layoffs coming from the “hourly headcount outside of the United States.”
The company employs roughly 19,000 full-time and 1,650 part-time employees globally. As Fortune reports, the layoffs “are one pillar of the company’s so-called ‘Margin for Growth’ program that is aiming to improve operating profit margins by reducing administrative expenses and improving the company’s supply chain.”
“We’re making progress against the ‘Margin for Growth’ related initiatives that should give us the flexibility to invest in certain parts of our business,” Buck said in a news release. “Our objective is to ensure that we always have the right level of innovation, marketing plans and consumer and customer expertise to drive net sales growth, especially in our North America confectionery and snacks business.”
The restructuring efforts, she added, “should enable the company to achieve its adjusted operating profit margin target of about 22% to 23% by year end 2019.”
Big Food companies including General Mills and Kellogg have been cutting costs amid an industry-wide sales slump. Hershey has also been struggling with unfavorable currency exchange rates and declining sales in China.
J.P. Morgan analyst Ken Goldman told The Associated Press he believes many of Hershey’s job cuts will come from Shanghai Golden Monkey, the Chinese chocolatier that it acquired in 2014.
Hershey’s plans also include continue to make investments to grow its core confectionery business and “expand its breadth across the snackwheel by capturing new usage occasions and participating in on-trend categories.”
Buck told analysts the chocolate and candy category is well positioned because it is “highly impulsive” with “expandable consumption” and Hershey expects to benefit from the snacking trend in the U.S. that has people eating more frequently throughout the day.