MW Kraft Heinz takes $9 billion charge for its stock's 'sustained decline' as it ponders strategic options

By Steve Gelsi

Kraft Heinz says it's still weighing options, which reportedly include the sale of many of its grocery-store brands, as it beats earnings expectations

Kraft Heinz Co.'s stock rose in early Wednesday trading despite a massive charge booked by the packaged-food giant for the losses in its stock price, after it said a potential breakup or sale is still being considered.

Kraft Heinz $(KHC)$ took the noncash impairment charge of $9.3 billion, citing a "sustained decline in our share price and market capitalization."

The stock has lost 15.6% over the past 12 months through Tuesday, while the Consumer Staples Select Sector SPDR exchange-traded fund XLP has gained 4.1% and the S&P 500 index SPX has rallied 17.2%.

The company, which had a market capitalization of more than $117 billion when the stock reached its peak in February 2017, saw its market cap at $33.8 billion as of Tuesday's close.

Meanwhile, the maker of Heinz Ketchup, Kraft Mac and Cheese and Lunchables reiterated its May statement that it is weighing whether to break up or take other material actions to unlock value.

Kraft Heinz said it's under no timetable to reach a decision as it "actively" progresses through a "rigorous review of a broad range of options." It may decide against any transaction, the company said.

Earlier this month, the Wall Street Journal had reported that the company was considering a breakup of its businesses.

Buoyed by the prospects of a potential deal as well as stronger-than-expected second-quarter results, Kraft Heinz's stock rose 0.4% in premarket trading on Wednesday.

Including the $9.3 billion impairment and other items, Kraft Heinz said it lost $7.97 billion, or $6.60 a share, in the second quarter, which ended June 28. In the year-ago quarter, Kraft Heinz earned $102 million, or 8 cents a share.

Adjusted profit, which excludes the nonrecurring items, was 69 cents a share, above the FactSet consensus estimate of 64 cents a share.

Revenue fell 1.9% to $6.35 billion but was ahead of Wall Street expectations of $6.27 billion.

The price of the company's goods increased by 0.7% to mitigate higher input costs, primarily in coffee, the company said.

"Unfavorable volume/mix was primarily driven by declines in cold cuts, coffee, Lunchables, frozen snacks, and powdered beverages," the company said.

The Wall Street Journal report earlier this month said Kraft Heinz was considering whether to spin off a large chunk of its grocery business in an entity that could be valued at as much as $20 billion.

Kraft Heinz was created in 2015 through a merger with backing from Brazilian private-equity giant 3G Capital and billionaire Warren Buffett of Berkshire Hathaway (CO:BRKB).

Also read: Kraft Heinz is reportedly weighing a breakup. Some analysts have already said it should 'slim down.'

-Steve Gelsi

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July 30, 2025 09:13 ET (13:13 GMT)

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