Kellogg’s has continued to provide two favorite cereals, Corn Flakes and Rice Krispies, without a hitch for the last seven decades. Kellogg shares have been up 7% this year, compared to a 3% decline for the S&P Consumer Staples Index.
The company has performed better than its competitors largely because of the cost-cutting efforts that they’ve instituted and the new, cheaper distribution system that they’ve developed. This week, the company reported weak third-quarter results and a reduced full-year forecast. No big deal, really – when Jeff Bezos at Amazon has done the same thing in recent years, the market analysts have simply yawned and continued to laud Bezos. However, the analysts’ group must be increasingly composed of members of the Snowflake generation – where the slightest aberration makes them melt. Because they’re finding all of this “very worrying” – even though CEO Steven Cahillane explained that the third quarter short-fall was due to “choices we made during the quarter to invest in our momentum,” including more advertising and increased shipments of single-serve snacks, which carry higher production costs. Cahillane reported that these kinds of investments are key to maintaining sales growth Yes, indeed – and, sounds like a real reason for congratulations, rather than commisserations, to me.