Message Font: Serif | Sans-Serif
No. of Recommendations: 0

Kellogg's Special K Day

By Alyce Lomax
April 22, 2004

It hasn't been an easy year for many food companies, especially ones that stock the shelves with cereals, cookies, and crackers. However, Kellogg (NYSE: K) is bucking the trends -- it was as good as its word today when it delivered strong first-quarter results. Apparently, many consumers weren't willing to leggo their Eggos.

Kellogg's earnings were up 34%, to $219.8 million, or $0.53 per share. Net sales were 11% higher at $2.4 billion. However, a portion of the net sales contained a favorable foreign exchange rate component; internal sales, which don't include several such external factors, were 6.5% higher.

Still, growing sales and earnings don't hurt in a climate like this one. It hasn't been the easiest time for food mega-giants to peddle their wares. Consider Kraft's (NYSE: KFT) continued woes, which include, of course, changing consumer views on what they should fill their stomachs with.

Emphasizing choice, Kellogg has been releasing new products as well as new and improved versions, like low-carb Special K or Froot Loops with one-third less sugar. Meanwhile, many older Kellogg standbys, such as Pop-Tarts, Eggo, and Morningstar Farms, are still going strong. However, in a scenario that has hit Kraft hard as well, cookies and crackers continue to be weak, casualties of the low-carb craze.

In its conference call (transcript courtesy of CCBN StreetEvents), Kellogg said that it believes the low-carb phenomenon has peaked. Whether that fad has indeed reached its apex is an important takeaway for any investors who watch food companies, including rival General Mills (NYSE: GIS).

Although the coming year will provide difficult comparisons and Kellogg didn't boost its existing guidance, Kellogg shareholders have little to complain about. While some companies have found recent history a struggle, Kellogg's shown that a balance of stable brands and new product innovations has kept it on the table.

Looking for stable stocks that deliver dividends like Kellogg does? Mathew Emmert spends his time thinking up Foolish stocks that deliver income investing, such as one of his stock picks with a food component, Sara Lee (NYSE: SLE).

Alyce Lomax does not own shares of any of the companies mentioned. She's definitely no kid anymore, but every once in a while she'll still indulge in a brown sugar-and-cinnamon Pop-Tart.

Print the post  


What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.