WK Kellogg Co Reports 8.8% Decline in Net Sales and 78% Drop in Net Income for Quarter Ended June 28, 2025

WK Kellogg Co reported a significant decline in financial performance for the quarter ended June 28, 2025, with net sales of $613 million, down 8.8% from $672 million in the same quarter of the previous year. Year-to-date net sales also fell to $1.276 billion from $1.379 billion, reflecting a 7.5% decrease. The company's net income for the quarter was $8 million, a sharp decline of approximately 78% compared to $37 million in the prior year quarter. For the year-to-date period, net income decreased to $29 million from $71 million, marking a 59% drop. The decline in sales and profitability was attributed to unplanned downtime in supply chain operations and increased restructuring costs of $14 million for the quarter and $28 million year-to-date.

In terms of operational metrics, WK Kellogg Co's gross profit margin for the quarter was 27.2%, down from 30.1% in the prior year, while the year-to-date gross margin decreased to 28.2% from 29.6%. The company reported a decrease in volume of approximately 8.1% for the quarter and 8.3% year-to-date, indicating challenges in product demand. The company’s selling, general, and administrative expenses decreased slightly to $143 million for the quarter, down from $149 million, primarily due to reduced advertising and promotional expenses.

Strategically, WK Kellogg Co is undergoing a significant restructuring plan aimed at modernizing its supply chain, which includes the planned closure of its Omaha, Nebraska plant by the end of 2026. This restructuring is expected to incur total charges between $230 million and $270 million, with a substantial portion related to non-cash charges. Additionally, the company has entered into a merger agreement with Ferrero International S.A., which will see WK Kellogg Co merged into Ferrero, with shareholders receiving $23.00 per share in cash. This merger is subject to various conditions, including shareholder approval and regulatory clearances.

Geographically, WK Kellogg Co's sales in the United States accounted for $529 million of the total net sales, down from $589 million in the previous year. Sales in Canada remained stable at $75 million, while other regions contributed $9 million. The company’s total assets increased to $2.124 billion as of June 28, 2025, compared to $1.983 billion at the end of the previous fiscal period, driven by higher cash and inventory levels. The company’s employee headcount remained stable at 86 million shares outstanding, reflecting no significant changes in workforce size.

Looking ahead, WK Kellogg Co anticipates continued challenges in the market, including macroeconomic pressures and competitive dynamics. The company is focused on executing its restructuring plan and managing costs effectively while navigating the complexities of the proposed merger with Ferrero. The outlook remains cautious as the company aims to stabilize its operations and improve financial performance in the coming quarters.