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Kellogg Fires Hundreds

Douglas A. McIntyre

As the cereal business continues to suffer, so does the Kellogg Co. (NYSE:K) workforce. Several hundred people were laid off as the company shutters some of its shipping centers. The most recently layoffs were in North Carolina and Texas.

Kellogg's has recently tried to make its delivery infrastructure more efficient. Under a program dubbed Project K, snack food delivery will be moved from "direct to store" to "direct to warehouse" delivery. The company started the process in 2013 and expects to save $470 million a year via the changes. The savings are all expected to be realized by next year.

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Morning eating habits have rotated away from corn flakes and sugary cereals. Healthier choices and fast-food breakfasts have robbed Kellogg's of some of its customers. In the most recent quarter, revenue dropped from $3.4 billion in the quarter a year ago to $3.26 billion. Net income rose to $262 million from $175 million. Cost cuts were critical to the improvement. So, as sales shrink, Kellogg's will have to find more ways to save money.

Kellogg's road to some modest level of growth may come from product diversification. It recently launched a new set of Pop Tarts with Jolly Rancher. Candy-flavored breakfast is the latest breakfast from Kellogg's.

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That may not be enough. Kellogg's shares are down 3% this year to $71.68 apiece.

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