WK Kellogg is upbeat about going it alone as CEO says 'don't sleep on our core brands'

MW WK Kellogg is upbeat about going it alone as CEO says 'don't sleep on our core brands'

By Bill Peters

'The fastest growing brand is Frosted Flakes,' CEO Gary Pilnick noted. 'It's been around for 70 years.'

Cereal maker WK Kellogg Co. on Thursday talked up its longer-term prospects at an analyst conference, saying that it was better off focused solely on breakfast staples like Frosted Flakes and Raisin Bran after breaking off from Kellanova last year.

The remarks come after WK Kellogg (KLG) last month offered a slightly dimmer sales outlook for the full year, as its Special K brand struggles and it deals with supply issues for Bear Naked, one of its popular granola brands.

But Chief Executive Gary Pilnick said at Thursday's event that the company was seeing "a small improvement" from the second quarter heading into the third, when the company tends to spend more on branding efforts related to the back-to-school season.

Executives also held to their profit-expansion targets coming out of 2026, as they plan to close one plant and scale back another while rethinking how the company sources and brings food to customers.

WK Kellogg shares jumped 10.3% on Thursday, with the stock up 41% so far this year. The company and Kellanova $(K)$ split off from the former Kellogg Co. last year, in an effort to help each focus on their strengths and regain profits.

During the conference, WK Kellogg executives acknolwedged they could do more in digital sales, and said they aim to revive the company's level of innovation next year after a slump this year.

They added that they see an opportunity to recharge the company's granola business as it untangles snags in its supply chain, and bring more buzz to its Special K brand, which lost market share following a less assertive advertising effort toward people looking to get in shape after the holidays.

Pilnick also said there is an opportunity to capitalize on "premium" spending.

"In this day and age when we know there's pressure on consumers, premium in our category is also growing, which gives you a sense of the overall affordability of our space," he said.

"But don't sleep on our core brands," Pilnick added. "Because if you take a look at what's happening right now, the fastest growing brand is Frosted Flakes. It's been around for 70 years. That's what happens when you get the flywheel spinning with merchandising and innovation and ideas."

-Bill Peters

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September 05, 2024 14:18 ET (18:18 GMT)

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