Kellogg Jumps as Snack Sales Offset Nagging Weakness in Cereal

(Bloomberg) -- Kellogg Co. rose in early trading after the company’s sales exceeded expectations, driven by the popularity of frozen foods and snacks like Pringles potato chips and Pop-Tarts. That offset more declines for cereal.

• The packaged-food giant reported second-quarter revenue that rose 3% from a year earlier to $3.46 billion, above analysts’ average estimate. The company reaffirmed its guidance for sales to grow in a range of 1% to 2% for the full year.

Key Insights

• Kellogg’s shares have lagged behind the broad rally in U.S. equity markets, so this report alleviates some of the pressure on the Battle Creek, Michigan-based company. Chief Executive Officer Steve Cahillane said Kellogg has “increased confidence that we will finish the year on our guidance.”

• With cereal slumping, Kellogg has looked to salty snacks such as Pringles and Cheez-Its to boost revenue. Snack sales in North America rose 4% in the quarter, while cereal sales declined 5% -- part of a shift by consumers away from the long-time breakfast staple.

Market Reaction

• Kellogg shares rose as much as 5.1% to $61.20 in early trading. The stock has gained 2.1% this year through Wednesday’s close.

--With assistance from Craig Giammona and Cécile Daurat.

To contact the reporter on this story: Deena Shanker in New York at dshanker@bloomberg.net

To contact the editors responsible for this story: Anne Riley Moffat at ariley17@bloomberg.net, Jonathan Roeder

©2019 Bloomberg L.P.