Kellogg struggles to grow in US business even as earnings beat

Bloomberg

Kellogg Co.’s home market remains a challenge.
The company posted second-quarter sales and profit that topped analysts’ estimates and raised its revenue forecast for the year. But struggles to ignite growth in its US cereal and snacks businesses damped investor enthusiasm. The shares fell as much as percent 3.8 percent to $66.79, the biggest intraday decline in three months.
Kellogg has returned to revenue growth with CEO Steve Cahillane at the helm, breaking out of a four-year sales slump largely on the strength of stronger results abroad. He’s said the plan is to stabilise the company’s operations in North America, while driving growth in international markets.
The maker of Raisin Bran cereal and Eggo waffles has invested in Latin America and Africa in recent years and is getting a boost from those operations, even as challenges remain in the
domestic market.
“There’s somewhat of a ‘trust me’ factor here,” said Ken Shea, an analyst at Bloomberg Intelligence. “He comes across as a very capable executive who has his arms around the challenge. He’s conveying a game plan.”
Cahillane said that the company’s US operations are improving, particularly as declines in the cereal business start to ebb.
Kellogg is also increasing its marketing spending amid a competitive retail environment among US grocers.
The company has exited its direct-store-delivery programme, where employees delivered products directly to stores, and plowing some of those savings into promotions and advertising to boost sales of products like Pringles and Special K.