Kellogg shares plunged the most intraday since 2000 after the company cut its profit forecast and reported a decline in US breakfast foods - underscoring the difficult road that packaged food companies are facing as consumer tastes change.
Key Insights
The company assured investors that cereal sales - an area of concern - are turning around. The performance, however, was held back by a June recall of Honey Smacks. Kellogg is trying to boost sales of healthier cereals as consumer preferences shift.
Kellogg cut its full-year profit forecast as it increases investment. Chief Executive Officer Steve Cahillane said higher spending on brands and new pack formats are leading the company to sales growth. Higher distribution and transportation costs also had an impact. The company said it was offsetting these with productivity improvements.
Market Reaction
The shares fell as much as 9.6% to $64.95, erasing the stock’s 5.7% advance this year through Tuesday’s close. The drop was the most intraday since 2000.
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