Kellogg Cuts Amid Struggling Sales
Everyone’s favorite cereal company Kellogg (NYSE:K) reported third quarter earnings that beat analyst estimates at the start of the week. During the quarter, Kellogg announced it earned $326 million, or 90 cents per share. Not including one-time items, the company earned 95 cents per share, above the 89 cents per share Wall Street analysts had expected. In the third quarter of last year, the company earned $318 million, or 89 cents per share. On the top line Kellogg reported its revenue slipped to $3.72 billion and was short of the $3.73 billion analysts expected.
Over the last year the company has actively looked to diversify its portfolio of brands. With the acquisition of Pringles the company expanded into the salty snacks business, Kellogg is hoping that the chips will also give it a bigger presence overseas. However, sales in the U.S. Snacks segment also fell by 2.5 percent in the period. Kellogg said sales in its U.S. Morning Foods segment fell by 2.2 percent.
Moreover, the company announced it plans to cut its global workforce by 7 percent, as a result of the struggling growth. According to FactSet, Kellogg has 31,000 employees, suggesting the company plans to cut about 2,170 jobs. The company went on to say the workforce reductions will take place by the end of 2017.
At the time of this writing shares of the company were down by a percent to $62.10 per share. Shares of the company are higher by just over 10 percent so far this year. Slight underperformance to the broader averages. Going into the rest of the week it remains likely we see analyst updates and guidance to follow the quarter. The S&P 500 was down by 4 points to $1763 at the time of this writing.
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