WK Kellogg 2025 Q1 Earnings Misses Targets as Net Income Falls 45.5%
Wednesday, May 7, 2025 7:33 am ET
19min read WK Kellogg (KLG) reported its fiscal 2025 Q1 earnings on May 6th, 2025. The company missed analysts' expectations as its net income fell 45.5% compared to the prior year's first quarter. WK Kellogg also adjusted its guidance for the full year, projecting a decline in organic net sales of 2 to 3 percent, which is lower than the previous forecast of a 1 percent decline. This revision reflects weaker consumer trends and tariff impacts.
Revenue
The total revenue of WK Kellogg decreased by 6.2% to $663 million in 2025 Q1, down from $707 million in 2024 Q1.
Earnings/Net Income
WK Kellogg's EPS declined 47.4% to $0.20 in 2025 Q1 from $0.38 in 2024 Q1. Meanwhile, the company's net income declined to $18 million in 2025 Q1, down 45.5% from $33 million reported in 2024 Q1. Despite the drop in EPS, the company has maintained profitability over the last three years, indicating stable business performance.
Price Action
The stock price of WK Kellogg surged 19.53% during the latest trading day, edged up 0.34% during the most recent full trading week, and tumbled 10.04% month-to-date.
Post-Earnings Price Action Review
The strategy of purchasing WK Kellogg shares following a quarter-over-quarter revenue drop and holding for 30 days has performed poorly over the past five years. It resulted in a return of -10.83%, significantly underperforming the benchmark return of 25.97%. The excess return was -36.80%, with a CAGR of -7.14%, indicating substantial losses for investors. The strategy also endured a high maximum drawdown of -14.47% and a Sharpe ratio of -0.37, highlighting significant risk and negative returns.
CEO Commentary
Gary Pilnick, Chairman & Chief Executive Officer, emphasized that WK Kellogg is experiencing a positive shift in consumer interests towards health and wellness within the cereal category, which they have been preparing for. He noted that while consumer sentiment is generally down, there is a willingness to pay more for health and nutrition, creating a favorable long-term trend for the company. Pilnick highlighted ongoing strategic initiatives, including the Kashi relaunch and brand campaigns focused on fiber, asserting confidence in their ability to adapt and grow despite current challenges. He maintained an optimistic outlook, ensuring that their strategic priorities are on track to drive long-term value.
Guidance
WK Kellogg anticipates a gross margin contraction in Q2 but expects to stabilize inventory levels and achieve improved margins in the latter half of 2025. The company continues to guide for a 500 basis points EBITDA margin expansion by the end of 2026, with confidence in their restructuring initiatives. They project low single-digit pricing realization for the remainder of 2025, with volume and pricing expected to move in line during Q3 and Q4, reflecting the adjustments made to their manufacturing and marketing strategies in response to market conditions.
Additional News
In recent weeks, WK Kellogg announced a quarterly dividend of $0.165 per share, payable on June 13, 2025. Additionally, the company furnished a Current Report on Form 8-K with the SEC, detailing its revised sales growth outlook amidst challenging consumer trends. WK Kellogg highlighted its ongoing efforts to navigate tariff impacts and forecasted organic net sales decline for 2025, adjusting from a previous 1 percent to a 2 to 3 percent decline. The company also hosted its Annual Shareholder Meeting on May 1, 2025, maintaining transparency with stakeholders about its strategic initiatives.
Revenue
The total revenue of WK Kellogg decreased by 6.2% to $663 million in 2025 Q1, down from $707 million in 2024 Q1.
Earnings/Net Income
WK Kellogg's EPS declined 47.4% to $0.20 in 2025 Q1 from $0.38 in 2024 Q1. Meanwhile, the company's net income declined to $18 million in 2025 Q1, down 45.5% from $33 million reported in 2024 Q1. Despite the drop in EPS, the company has maintained profitability over the last three years, indicating stable business performance.
Price Action
The stock price of WK Kellogg surged 19.53% during the latest trading day, edged up 0.34% during the most recent full trading week, and tumbled 10.04% month-to-date.
Post-Earnings Price Action Review
The strategy of purchasing WK Kellogg shares following a quarter-over-quarter revenue drop and holding for 30 days has performed poorly over the past five years. It resulted in a return of -10.83%, significantly underperforming the benchmark return of 25.97%. The excess return was -36.80%, with a CAGR of -7.14%, indicating substantial losses for investors. The strategy also endured a high maximum drawdown of -14.47% and a Sharpe ratio of -0.37, highlighting significant risk and negative returns.
CEO Commentary
Gary Pilnick, Chairman & Chief Executive Officer, emphasized that WK Kellogg is experiencing a positive shift in consumer interests towards health and wellness within the cereal category, which they have been preparing for. He noted that while consumer sentiment is generally down, there is a willingness to pay more for health and nutrition, creating a favorable long-term trend for the company. Pilnick highlighted ongoing strategic initiatives, including the Kashi relaunch and brand campaigns focused on fiber, asserting confidence in their ability to adapt and grow despite current challenges. He maintained an optimistic outlook, ensuring that their strategic priorities are on track to drive long-term value.
Guidance
WK Kellogg anticipates a gross margin contraction in Q2 but expects to stabilize inventory levels and achieve improved margins in the latter half of 2025. The company continues to guide for a 500 basis points EBITDA margin expansion by the end of 2026, with confidence in their restructuring initiatives. They project low single-digit pricing realization for the remainder of 2025, with volume and pricing expected to move in line during Q3 and Q4, reflecting the adjustments made to their manufacturing and marketing strategies in response to market conditions.
Additional News
In recent weeks, WK Kellogg announced a quarterly dividend of $0.165 per share, payable on June 13, 2025. Additionally, the company furnished a Current Report on Form 8-K with the SEC, detailing its revised sales growth outlook amidst challenging consumer trends. WK Kellogg highlighted its ongoing efforts to navigate tariff impacts and forecasted organic net sales decline for 2025, adjusting from a previous 1 percent to a 2 to 3 percent decline. The company also hosted its Annual Shareholder Meeting on May 1, 2025, maintaining transparency with stakeholders about its strategic initiatives.
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