Kellogg CEO: No 'discernible' impact from online boycott

NEW YORK -- Kellogg said it saw no "discernible" effect from an online boycott spurred by its decision to pull ads from a website formerly run by one of President Trump's top aides.

CEO John Bryant said it's difficult to gauge the effect of such consumer actions, given the volume of its sales, but the company did not see any effect it could attribute to the boycott.

Kellogg had announced its decision in late November to pull ads from Breitbart.com, which has been criticized for featuring racist, sexist and anti-Semitic content.

The website subsequently called for a boycott of the company.

At the time, Kellogg had said it works with media buying partners to ensure its ads don't appear on sites that aren't "aligned with our values." The company and others have said such ad placement can come about because of automated ad-buying programs.

"We had no intention of getting into a political discussion," Bryant said in a phone interview Thursday.

Paul Norman, president of Kellogg North America, also said Thursday the company generally does not advertise on news sites because there is a chance an ad can end up next to a negative story.

For the last three months of 2016, Kellogg said its U.S. cereal sales were flat. The company has been dealing with slumping cereal sales for years as people reach for a variety of breakfast options, and the image of Special K, one of its biggest brands, has become outdated. Its effort to boost cereal's image has included opening a cereal cafe in New York City.

To improve its financial performance, Kellogg also has been slashing costs and last week noted it will end all direct delivery of products to supermarkets and big-box retailers.

Instead, it will ship those products to warehouses before they move to retailers' distribution centers -- a system the company already uses for the majority of its products.

Kellogg said the move will free up money to invest in activities such as advertising that more directly help boost sales.

While domestic cereal sales were flat in the quarter, sales for the broader U.S. Morning Foods unit dipped as it discontinued some products, such as breakfast shakes.

The company noted the broader cereal category is expected to be flat to down 1 percent in 2017.

The company said its U.S. snacks business, which includes Cheez-Its, Pringles and Special K bars, showed improvement in the quarter, though sales were down 1 percent for the year.

A major drag has been Special K, and the company said its aspiration is to stem the double-digit percentage declines in 2016 to declines of about 5 percent or better this year.

For the quarter, total sales were $3.1 billion, slightly better than expected revenue of $3.07 billion. The company reported a loss of $53 million, or 15 cents per share, as it booked charges for restructuring and deconsolidating its Venezuela business. Not including one-time items, it said it earned 92 cents per share.

That beat the 85 cents per share Wall Street expected, and Kellogg's stock rose more than 3 percent to $76.19.

Kellogg cut its sales forecast for 2017, citing the discounts it gives to retailers when it does not provide direct delivery to stores. It expects currency-neutral sales to decline about 2 percent for 2017. It previously forecast flat sales.

J.P. Morgan analyst Ken Goldman said the change could lead to problems, such as retailers being out of stock of certain items.

But over the long term, Goldman said he thinks it's the right move for Kellogg because direct delivery is "an expensive luxury."