Dive Brief:
- Nestlé fell short of Wall Street estimates as the maker of KitKat candy, Dreyer's ice cream, and Nescafe coffee said sales fell 5.1% in the most-recent quarter.
- Nestlé said the unusually cold winter in North America, where the company earns roughly a quarter of its income, hurt income. Other problems cited by the Switzerland-based conglomerate were a strong Swiss franc, weak consumer confidence in Europe, and sluggish growth in emerging markets.
- Nestlé does not report net earnings on a quarterly basis. The company maintained its earnings outlook for the full year.
Dive Insight:
Times are tough for Nestlé, and things must be getting more than a little tense at the main office in Vevey. But it may be beneficial for the company's executives to take a few deep breaths and shake off the most-recent sales figures.
The first quarter was disappointing, but most of what appeared to go wrong involved one-off items rather than systemic problems. While there seems to be no hope for substantial growth in North America or Europe for Nestlé's well-established brands, with the possibility of currency-valuation issues dragging on for years, winter is over here in the States. Along with that, Easter falls in April this year, meaning that candy sales will likely look much better in Q2 than in Q1.
As long as Nestlé continues to unload its suboptimal brands, there's no reason to panic yet about the company's balance sheet.