The troubles continue for cereal giant Kellogg’s as it announced layoffs of more than 400 Texans working in company distribution centers this summer.
In this latest round of layoffs, 421 employees will lose their jobs in two Texas distribution centers–201 in Fort Worth and 220 in Houston. Part of a larger ongoing cost-cutting measure, the cereal manufacturer told the Texas Workforce Commission it plans to cut most of the affected staff between July 29 and August 17, according to The Dallas Morning News.
In February, the beleaguered Kellogg Company announced it intended to axe around 1,100 jobs from payroll nationwide, shutting down 39 distribution centers by 2018 following a $53 million fourth-quarter loss in 2016. They said this was mainly due to a drop in their snack sales and unrelated to the company’s politically-driven decision to pull ads from Breitbart News in late December. Previously, the Kellogg Company said Breitbart News’ conservative readership was not “aligned with our values as a company.” This resulted in a boycott and intense online backlash against the cereal company.
According to Kellogg’s, consumer shopping patterns and behaviors have changed significantly in the past few years, impacting their snack business model. To stay afloat, the struggling company decided to retool their snack business model, switching from shipping those products directly to their U.S. retailers and instead to their retailers’ warehouses, reducing costs and offsetting dipping brand popularity. The company says the Pringles line and much of Kellogg’s North America sales already uses the warehouse model.
In an email, Kellogg’s spokesman Kris Charles told the Houston Chronicle that the company remains optimistic its displaced employees will find similar jobs with the retailers. As the distribution shifts from our network to our retailers’ networks, so too will the work.”
Charles says the company is “actively engaged in conversations” with some of their biggest retail partners who “expressed strong interest” in hiring laid off employees for high demand roles after the “transition is complete.”
In February, John Bryant, Kellogg Company chairman and CEO, said: “While this is the right move for the future of the company, it was a difficult decision because of the impact on affected employees.” He noted: “We are doing everything we can to help our employees manage through this transition.”
In May, the Nasdaq reported that Kellogg’s sales fell short of expectations for the first quarter of 2017, slipping 4.1 percent year over year, despite layoffs and with assistance from a tax benefit. Again, the cereal company attributed the downward spiral to industry-wide soft consumption trends for packaged food items.
In their 2017 earnings report and financial outlook, the Kellogg Company forecasted a decline in currency-neutral comparable net sales of roughly 3 percent for 2017. Previously, they predicted a 2 percent decline.
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