BATTLE CREEK, Mich. - Kellogg (K) reported a lower quarterly profit Thursday as cereal sales fell again in the U.S.
The company, which makes Frosted Flakes, Pop Tarts and Eggo, said core sales in its cereal division declined 4.7 percent. To turn around its performance, CEO John Bryant said the company planned to revamp its Special K line, including with varieties that address food trends, such as gluten-free and added-protein varieties.
The company, based in Battle Creek, Michigan, is contending with growing competition in the breakfast category, with people turning to alternatives such as Greek yogurt or breakfast sandwiches from fast-food chains. Kellogg has already made some efforts to boost cereal sales, such as marketing cereal as a nighttime snack, with boxes of Mini Wheats and Froot Loops showing the moon and stars.
In the meantime, Kellogg is also slashing costs and said late last year it plans to cut its global workforce by 7 percent.
Despite the continuing declines in cereal sales, Bryant said during a conference call that he was confident the category would eventually return to growth.
Kellogg also posted declines in its U.S. snacks division and international segment for the three months ended Sept. 27.
For the quarter, it earned $224 million, or 62 cents per share. A year ago, it earned $326 million, or 90 cents per share.
Not including one-time items, such as costs associated with its cost-cutting plan, it earned 94 cents per share in the most recent quarter. That was a penny more than analysts expected, according to Zacks Investment Research.
Revenue declined to $3.64 billion and fell short of Wall Street expectations for $3.7 billion.
Kellogg Co. still expects full-year earnings in the range of $3.81 to $3.89 per share.
Its shares rose 2.6 percent to $64.07 in morning trading.