The Kellogg Company (K) is reportedly exploring the sale of its cookies and fruit snacks divisions in order to focus on its core businesses. The brands that could be put up for sale include Keebler, Famous Amos, Chips Deluxe, and Fruity Snacks along with a few others.
Kellogg is struggling with shifts in consumer preferences and a slowdown in demand for cereals leading the company to explore ways to lure customers with healthier options. The proposed sale is part of the company’s efforts to cut down weight and focus its efforts on driving growth and demand within its core businesses.
Kellogg is planning on reducing the complexities in its structure in order to better facilitate the consolidation of certain operations and to better channel investments and resources between brands. The company is looking to combine its morning foods, frozen foods, and snacks businesses into a single division. These units make up for the majority of Kellogg’s revenues.
Kellogg is planning the reorganization of its workforce in North America, which will result in some jobs being cut. The company will also increase investments in its online channel. Like Kellogg, several food companies, including General Mills (GIS), Kraft Heinz (KHC) and Campbell Soup (CPB), are opting for the sale of slow-growing divisions in order to focus on more profitable ones.
During its most recent quarter, Kellogg’s North America business posted a year-over-year sales increase but within the division, the US Snacks, US Morning Foods and US Specialty Channels segments saw sales declines. The North America Other segment, which includes the frozen foods unit, reported an increase in sales.
Kellogg’s stock has dropped 11% over the last three months and looking at the past one month, the stock is down 7%. As of 2:45 pm ET, the stock was down over 2.1%.
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