WK Kellogg 2025 Q2 Earnings Misses Targets with Net Income Drop of 78.4%

WK Kellogg (KLG) reported its fiscal 2025 Q2 earnings on Aug 07, 2025. The results fell below expectations, with a steep decline in both revenue and net income. The company suspended full-year guidance due to its pending merger with Ferrero.

Revenue
WK Kellogg's total revenue declined by 8.8% year-over-year to $613 million in Q2 2025. Organic net sales mirrored this drop, reflecting a challenging operating environment and a decline in volume. The company has faced ongoing pressure from lower demand and pricing challenges, despite strategic efforts to modernize its supply chain.

Earnings/Net Income
The company’s earnings per share (EPS) dropped 79.1% year-over-year to $0.09, and net income fell 78.4% to $8 million. These declines were driven by lower sales and higher restructuring costs. Despite the significant drop, WK Kellogg has maintained profitability for three consecutive years, highlighting some long-term stability in its core business. The earnings performance signals a need for improved cost management and execution in the back half of the year.

Price Action
The stock price of WK Kellogg edged up 0.26% on the latest trading day and 0.65% for the week. More impressively, it surged 37.20% month-to-date, indicating strong investor confidence in the company’s strategic direction and pending merger with Ferrero.

Post-Earnings Price Action Review
A strategy of buying WK Kellogg shares after a revenue increase and holding for 30 days has historically performed well, delivering an overall return of 78.83% over the past three years. This outperformed the benchmark return of 50.46% by 28.37%, with a compound annual growth rate (CAGR) of 37.88% and no maximum drawdowns, highlighting the strategy’s robust risk-adjusted returns.

CEO Commentary
Gary Pilnick, Chairman and CEO of WK Kellogg, acknowledged the challenging operating environment but emphasized progress on key initiatives, particularly supply chain modernization. He expressed confidence in the company’s ability to execute its back-half plans and prepare for the pending merger with Ferrero, calling it an "exciting next chapter" for the company.

Guidance
Due to the pending acquisition by Ferrero, WK Kellogg has suspended its full-year 2025 financial guidance. The company will not host a webcast for Q2 results and plans to provide further details in its Quarterly Report on Form 10-Q for the quarter ended June 28, 2025.

Additional News
WK Kellogg and Ferrero have entered a definitive agreement under which Ferrero will acquire WK Kellogg for $23.00 per share in cash. The transaction requires shareholder and regulatory approvals and is expected to close in the second half of 2025. CEO Gary Pilnick expressed optimism about the merger, which he described as an “exciting next chapter” for the company. The acquisition aligns with WK Kellogg’s broader strategic focus on long-term growth and operational efficiency. The company has also outlined several restructuring initiatives, including a reconfiguration of its supply chain network to improve productivity. These efforts, along with the merger, are expected to reshape the company’s future direction. The deal represents one of the most significant developments in the cereal industry in recent years and is likely to bring substantial changes to WK Kellogg’s operations and market position.