WK Kellogg’s 3-prong strategy slows sale & volume decline, paves way for possible full-year gains

The company’s adjusted net sales for the first quarter reached $707m – a 0.8% decline over the prior year, but “an improved trajectory versus our fourth quarter results,” CFO Dave McKinstray told analysts yesterday during WK Kellogg’s sales and earnings call.

In addition, he said, “the gap between price and volume continued to narrow for both us and the category during the first quarter,” during which WK Kellogg’s price realization of 6.3% was offset by a 7% drop in volume. While still in the wrong direction, these numbers were lower than the previous quarter when a price hike of 7.5% coincided with a 10.1% drop in volume and 2.7% decrease in net sales, McKinstray noted.

Despite the sequential improvement, WK Kellogg continues to lag the category slightly, which CEO Gary Pilnick attributed to the “the impact of our 2023 list price increase, which we did not fully lap until March.”

Nonetheless, Pilnick said, he was “pleased” with the performance of the company’s core brands, four out of six of which grew in the quarter despite the headwind of lapping price increases.

Frosted Flakes offers case study for strategic plan’s potential

He attributed these gains to WK Kellogg’s strategic plan, which rests on three pillars – the first of which is driving an integrated commercial plan to win, followed by modernizing the supply chain and “unleashing” an energized and winning culture.

As an example of how WK Kellogg is executing this plan, Pilnick pointed to the performance of Frosted Flakes, which grew dollar sales 1.4% in the US in the first quarter.