No ill ef­fects on sales de­spite Bre­it­bart boy­cott: Kel­logg CEO

The Hamilton Spectator - - THE MARKETS - THE AS­SO­CI­ATED PRESS NEW YORK —

Kel­logg says it saw no “dis­cernible” ef­fect from an on­line boy­cott spurred by its de­ci­sion to pull ads from a web­site for­merly run by one of Pres­i­dent Don­ald Trump’s top aides.

CEO John Bryant said it’s dif­fi­cult to gauge the im­pact of such con­sumer ac­tions given the vol­ume of its sales, but that the com­pany did not see any ef­fect it could at­tribute to the boy­cott. Kel­logg had an­nounced its de­ci­sion in late Novem­ber to pull ads from Bre­it­bart.com, which has been crit­i­cized for fea­tur­ing racist, sex­ist and anti-Semitic con­tent.

The web­site sub­se­quently called for a boy­cott of the com­pany.

At the time, Kel­logg had said it works with me­dia buy­ing part­ners to en­sure its ads don’t ap­pear on sites that aren’t “aligned with our val­ues.”

The com­pany and oth­ers have said such ad place­ment can come about be­cause of au­to­mated ad buy­ing pro­grams.

“We had no in­ten­tion of get­ting into a po­lit­i­cal dis­cus­sion,” Bryant said Thurs­day.

Paul Nor­man, pres­i­dent of Kel­logg North Amer­ica, also said Thurs­day that the com­pany gen­er­ally does not ad­ver­tise on news sites be­cause there is a chance an ad can end up next to a neg­a­tive story.

For the fi­nal three months of 2016, Kel­logg said its U.S. ce­real sales were flat. The com­pany has been deal­ing with slump­ing ce­real sales for years as peo­ple reach for a va­ri­ety of dif­fer­ent break­fast op­tions and the im­age of Spe­cial K, one of its big­gest brands, has be­come out­dated. Its ef­fort to boost ce­real’s im­age have in­cluded open­ing a ce­real café in New York City.

To im­prove its fi­nan­cial per­for­mance, Kel­logg has also been slash­ing costs and this week noted that it will end all di­rect de­liv­ery of prod­ucts to su­per­mar­kets and big-box re­tail­ers. In­stead, it will ship those prod­ucts to ware­houses be­fore they move to re­tail­ers’ dis­tri­bu­tion cen­tres — a sys­tem the com­pany al­ready uses for the ma­jor­ity of its prod­ucts.

Kel­logg says the move will free up money to in­vest in ac­tiv­i­ties such as ad­ver­tis­ing that more di­rectly help boost sales.

While do­mes­tic ce­real sales were flat in the quar­ter, sales for the broader U.S. Morn­ing Foods unit dipped as it dis­con­tin­ued some prod­ucts, such as break­fast shakes. The com­pany noted that the broader ce­real cat­e­gory is ex­pected to be flat to down 1 per cent in 2017.

Kel­logg re­ported sales of $3.1 bil­lion (all fig­ures US) in the fi­nal three months of 2016, slightly bet­ter than ex­pected rev­enue of $3.07 bil­lion. The com­pany re­ported a loss of $53 mil­lion, or 15 cents per share, as it booked charges for re­struc­tur­ing and de­con­sol­i­dat­ing its Venezuela busi­ness. Not in­clud­ing one-time items, it said it earned 92 cents per share.

AS­SO­CI­ATED PRESS FILE PHOTO

Kel­logg says a call for an on­line boy­cott of its prod­ucts isn’t hav­ing an ef­fect on its sales.

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