Post Holdings Announce More Price Increases: Will It Work?
Cereal is a troubled category, and increased costs are a challenge to consumers
Management at Post Holdings announced earnings last week, and things aren’t looking good for the St. Louis based consumer goods holding company. Net sales increased by 12.7%, but gross profit declined by 6.9% compared to the previous year. They’re bringing in more money, but making less profit. The primary cause? Transportation and commodity inflation. “The business has underperformed,” CEO Robert Vitale told investors.
To Vitale and the rest of Post’s management, the solution to their underperformance isn’t re-evaluating the portfolio, a portfolio that doesn’t quite seem to fit, but price increases. “We’ve been on the wrong side of the pricing versus cost inflation,” Vitale said, “and we are attempting in fiscal ’22 to have a fairly significant catch-up on that.” Post Holding’s attempted price increases will be a good test case for 2022. Can a company with limited brand power, who operates in declining categories, continue to pass costs on to consumers?
