The second-quarter earnings posted by WK Kellogg fell short of market expectations because consumers reduced their packaged cereal purchases due to changing preferences and economic instability. The company recorded an 8.8% decline in net sales which reached $613 million while analysts predicted $622.1 million. The company reported earnings per share at 9 cents which fell significantly below the expected 24 cents.
The company explained that consumers now prefer private-label brands because of rising inflation and trade disruptions caused by President Donald Trump’s tariffs. The company faces margin pressure because import duties on raw materials and packaging materials continue to fluctuate.
The Battle Creek Michigan-based company entered a $3.1 billion acquisition agreement with the Italian owner of Ferrero Rocher during the first part of this year and expects the deal to finalize in 2025. The acquisition provides the well-known cereal brand with a chance to achieve operational stability while reducing costs.
The packaged food industry faces declining consumer interest because people choose fresh ready-to-eat products instead of traditional packaged foods. The newly independent WK Kellogg faces significant challenges because it operates with a limited product range and lacks high-end offerings.
The company maintained its merger confidence while choosing not to provide updated full-year guidance. The stock prices remained steady during the initial trading period.
