Key Takeaways
- WK Kellogg introduced glazed donut-hole-inspired cereal in three flavors: Frosted Flakes, Apple Jacks, and Krave, part of an attempt to recover US market share.
- This sort of innovation, as well as the right pricing and messaging, may help the cereal giant gain ground, CEO Gary Pilnick said Tuesday.
- Kellogg reported earnings that outperformed analyst expectations, but disclosed that it lost 0.4% of U.S. market share in the last year.
Facing a drop in US market share, WK Kellogg (KLG) hopes to glaze over the issue.
It’s doing that in part with donut-inspired cereal, CEO Gary Pilnick said Tuesday as the company reported quarterly results that beat analyst expectations and lifted its stock price roughly 4%.
Kellogg said it is rolling out donut-hole-shaped cereals infused with the flavors of its Apple Jacks, Frosted Flakes, and Krave cereals. “Max glaze equals max flavor,” the company said in a description of one of the new products.
Those innovations—along with the right pricing and messaging—should help Kellogg regain standing in the cereal aisle, Pilnick told investors and analysts during an earnings conference call earlier today. The company reported fourth-quarter earnings that surpassed Wall Street’s expectations, but executives still faced questions about a 0.4% year-over-year slip in domestic market share.
The company envisions sales improving this year, with earnings before interest, taxes, depreciation, and amortization (EBITDA) projected to grow 4% to 6%. That forecast doesn’t factor in potential tariffs on goods imported from Mexico and Canada.
“We are confident that we have the right strategy and remain well-positioned to navigate through a dynamic operating environment,” Pilnick said, according to a transcript made available by AlphaSense.
Cereal Sales Fell for Q4, Year
Kellogg’s 2024 US cereal sales fell 2.8% year-over-year, a substantially deeper drop than seen in the industry broadly, Pilnick said. Sluggish Special K sales overshadowed steady or improving market share among Kellogg’s other brands, including Mini-Wheats, Rice Krispies, and Frosted Flakes.
Pilnick attributed market-share losses to Kellogg’s engaging in less “promotional activity” than its competitors in recent months.
Kellogg posted $37 million in adjusted net income for the quarter ended Dec. 28, which was 48% higher than the same period last year and above the $22.5 million analysts expected, per Visible Alpha.
The company reported $149 million in adjusted net income for 2024, above the $131 million consensus estimate. That’s 9.1% less than 2023 earnings, once adjusted for Kellogg’s spinoff of Kellanova.
Shares of Kellogg have added more than a third of their value over the past year.
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