MW Kellogg says some consumers are 'willing to pay more' for healthier options

By Steve Gelsi

Cereal giant seeks to connect with more buyers with a relaunch of Kashi and focus on fiber for value-conscious shoppers

WK Kellogg Co. has cut its full-year sales outlook but said it sees opportunity to appeal to cost-conscious consumers with healthier breakfast options.

The company's stock (KLG) was edging into positive territory Tuesday, reversing earlier losses after it said its business did not perform as well as expected in the three months ended March 29.

"While it's not the start to the year that we planned for, I hope you can hear that we are advancing with urgency and purpose to meet the evolving needs of our consumers within this challenging environment," Chief Executive Gary Pilnick told Wall Street analysts on Kellogg's earnings call Tuesday morning, according to a transcript.

The Corn Flakes and Rice Krispies maker said it's seeing a focus on value among its customers, but added people will consider higher-cost items that offer a wellness benefit.

"Sentiment is obviously down - we're all seeing the same information," Pilnick said. "In our category, what we're also seeing is some of our consumers are also willing to pay more. It's an interest in health and nutrition. I think that's going to continue."

The company said it sees this trend accelerating as part of a long-term shift in consumer orientation, rather than a fad.

"We don't expect it to slow," Pilnick said. "This is quite a good thing for our category and for us, because as folks are focusing on a combination of value and health ... we're a terrific destination for that."

Kellogg is promoting Kashi Go cereal with a refreshed package design and a "unique" mix of 10 grams of protein and 10 grams of fiber, with single-digit sugar.

"This is the type of food that should resonate well with our health-focused consumers," Pilnick said.

Looking ahead, WK Kellogg reduced its 2025 sales outlook to a drop of 2% to 3%, from its earlier view of negative 1%, due to weaker consumption trends.

The outlook includes a "modest" impact from tariffs for raw materials from outside North America.

The company is assuming that most of its production remains exempt from tariffs on imports to and from Mexico and Canada.

In its fiscal first quarter, WK Kellogg said its net income fell to $18 million, or 20 cents a share, from $33 million, or 37 cents a share, in the year-ago quarter. The company missed the FactSet consensus estimate of 39 cents a share.

Sales fell 5.6% to $667 million, below the analyst estimate of $679.1 million.

Price realizations rose 3.0%.

Including Tuesday's moves, WK Kellogg's stock has fallen 3.4% in 2025, while the S&P 500 SPX has dropped 4.8%.

WK Kellogg's stock launched in late 2023 as a separate company in the North American ready-to-eat cereal business that was spun out from the former Kellogg Co.

Kellanova $(K)$ retained about 80% of the original Kellogg Co. business with a focus on snacks such as Nutri-Grain, Pringles, Cheez-It, Pop-Tarts and international cereal brands such as Miel Pops and Crunchy Nut.

-Steve Gelsi

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May 06, 2025 14:01 ET (18:01 GMT)

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