WK Kellogg beat Wall Street estimates for third-quarter revenue and profit, driven by robust consumer demand for its ready-to-eat cereals, including Froot Loops and Apple Jacks.
Despite raising prices, the company increased sales volume as the brand maintained its strong presence in American households' breakfast routines, suggesting that brand loyalty and customer retention remain strong.
Consumer Trends
The Rice Krispies-maker's results contrasted those of other packaged food companies such as Kraft Heinz and Conagra Brands, which saw disappointing sales as customers opted for cheaper options.
Organic volume for the quarter declined 1.1%, improving compared to a 4.8% decline the previous quarter. The third quarter product pricing rose 1.8%, down from 2.1% in the second quarter.
WK Kellogg, which split from Kellanova last year, retained the North American cereal business of the original Kellogg company.
Its gross margin increased to 29.4% from 28.5% a year ago in the quarter.
In early August, the company announced a reorganisation plan involving plant closures, workforce reduction, and supply chain streamlining.
Quarterly Highlights
WK Kellogg's net sales fell to $689 million in the three months ended 30 September, compared with analysts' average expectation of $674 million, according to data compiled by LSEG.
Excluding items, it reported earnings of 31 cents per share, above analysts' estimates of 26 cents per share.
The company now expects full-year net sales growth to be at the lower end of its previous forecast range between a 1% decline and a 1% rise.
In May of this year, it beat Wall Street estimates for quarterly sales as higher product prices offset pressure from slowing demand for the Froot Loops maker's ready-to-eat breakfast items and snacks.
