Kellogg Drops Direct-Store Delivery as It Works to Prop Up Sales and Profits; Shares a Bit Rich
Narrow-moat Kellogg reported mixed fourth-quarter results, with 1.1% organic sales growth and 200 basis points of adjusted operating margin improvement to 16%. This was overshadowed by the announcement that the firm intends to discontinue its direct-store-delivery system in the U.S., through which it presently sells 60% of U.S. snacks but only 25% of U.S. business in the aggregate, and will move exclusively to warehouse distribution. Management says this move, slated to wrap by the fourth quarte...Kellogg is engaged in the manufacture and marketing of ready-to-eat cereal and convenience foods. The company's principal products are snacks, such as crackers, savory snacks, toaster pastries, cereal bars, granola bars and bites; and convenience foods, such as, ready-to-eat cereals, frozen waffles, veggie foods and noodles. The company's snacks brands are marketed under brands such as Kellogg's, Cheez-It, Pringles, Austin, Parati, and RXBAR. The company's cereals and cereal bars are generally marketed under the Kellogg's name, with some under the Kashi and Bear Naked brands. The company's frozen foods are marketed under the Eggo and Morningstar Farms brands.
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