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Will Godiva's Retail Exit Spark New Chocolate War?

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The chocolatier Godiva announced earlier this week it will be closing all 128 of its U.S. and Canada stores in March, with a shift to selling its products in grocery and e-commerce channels.

What's Next For Godiva: The New York City-headquartered company, founded in Belgium in 1926 and acquired by the Turkish conglomerate Yildiz Holding in 2007, said its decision was based on waning consumer interest for in-person shopping, with CEO Nurtac Afridi pointing out the company's products are "already available in many retailers in North America, and we will continue to increase our presence there."

The company's stores in Europe, China and the Middle East will remain operational. Godiva's retail presence in North America was mostly in high-end malls, which have seen acute declines in foot traffic during the coronavirus pandemic.

Why It's Important: Premium chocolate has been a popular comfort food during the pandemic, with the National Confectioners Association reporting grocery sales for the product were up by 21.4% during the first six months of the pandemic.

Whether privately held Godiva's new focus on grocery and e-commerce will spark a chocolate war remains to be seen, but the publicly traded U.S.-based chocolate companies will certainly not be eager to cede territory.

The Choco Competition: Hershey Co.'s (NYSE: HSY) North America net sales during the third quarter totaled $2.1 billion, up 6.3% year-over-year. With many people stuck at home during the pandemic, sales of Hershey's baking items, including peanut butter, syrup, chips and cocoa, continued to remain strong and were up 15.7% year-over-year.

Tootsie Roll Industries (NYSE: TR) saw $156.9 million in third-quarter net sales, down 14% from $181.9 million one year earlier. The company said its reliance on group events and gatherings suffered with pandemic-induced cancellations, cutting off a significant revenue stream.

Mondelez International, Inc. (NASDAQ: MDLZ), parent company of the Cadbury, Milka and Toblerone brands, reported $2.059 billion in third- quarter sales, up 12.9% year-over-year.

While the company, which has a diverse product portfolio, did not break out North American chocolate sales in its earnings report, Chairman and CEO Dirk Van De Put said in the earnings call that "chocolates came back in Q3. It accelerated versus Q2 largely because some of our emerging markets came back, like for instance, India."
Rocky Mountain Chocolate Factory (NASDAQ: RMCF), a franchisor and manufacturer, reported third- quarter revenue of $8.3 million, up 4.6% year over year, but net income fell 17% to $724,968, which the company blamed on higher operating costs for its Aspen Leaf Yogurt stores and rising fuel and transportation costs.

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