Kellogg Co., the largest U.S. maker of breakfast cereals, named John A. Bryant to replace David Mackay in the top job, tasked with lifting sales and rebounding from a year that saw a 7.3 percent drop in the stock.
Bryant will assume the president and chief executive roles on Jan. 2, the day after Mackay, 55, retires from the company, Kellogg said today in a statement. Bryant, chief operating officer of Battle Creek, Michigan-based Kellogg, joined the company in 1998. Previously, he led the North America and international divisions and served as chief financial officer.
Kellogg is facing slumping demand for cereal after a June recall and heightened competition. It plans to introduce new products, including Crunchy Nut cereal and Special K with Oats and Honey, to boost demand amid rising costs for commodities such as wheat and sugar as well as weak consumer spending.
“Making the transition on Jan. 1 is rather abrupt, and it goes back to the miserable year that Kellogg has delivered for shareholders,” David Kolpak, who helps oversee $42 billion at Cleveland-based Victory Capital Management, said in a telephone interview. “I respect the board’s urgency to address this issue.” His firm’s holdings include Kellogg stock.
Kellogg, maker of Pop-Tarts and Frosted Flakes cereal, cut its 2010 earnings forecast in October for the second time this year. Third-quarter profit dropped 6.4 percent to $338 million on declining sales, Kellogg said Nov. 2. The cereal maker today reaffirmed its forecasts for 2010 and 2011.
“This past summer, I became eligible to retire and made a commitment to spend more time with my family,” Mackay said in the statement. He was president and CEO for the past four years and will stay with the company through March 31, Kellogg said.
Kellogg fell 20 cents to $49.30 at 4:00 p.m. in New York Stock Exchange composite trading. The stock has declined this year while the Standard & Poor’s 500 Index gained 9.7 percent.
Kris Charles, a Kellogg spokeswoman, declined to say whether the board looked at candidates outside the company to succeed Mackay.
Bryant, 45, faces challenges including surging costs for raw ingredients, which has led rivals such as General Mills Inc. to raise prices on some products.
“While cost inflation is looming, Kellogg is pushing prices up and reducing its promotional spending particularly in cereal, cookies, and crackers,” Christopher Growe, an analyst at Stifel Nicolaus & Co., said in a note to clients today. The St. Louis-based analyst recommends buying the shares.
Mackay told investors on a conference call last month that the company pulled back on innovation during the recession, which lowered sales from new products by about 25 percent in 2009 and 2010 compared with 2008.
Eric Serotta of Wells Fargo Securities said in a note that “weak consumer spending” could limit Kellogg’s ability to increase sales in 2011, even as it introduces new products. The New York-based analyst rates the shares “market perform.”