It has been a rough week for Tony the Tiger as CNBC reports Kelloggs’ sales fell for the eighth consecutive quarter and reporting a loss of 53 Million for the fourth quarter of last year. This of course means that Kelloggs looking for options to tighten the belt and will be closing 39 distribution centers across the country resulting in almost 1,100 people being laid off as reported by Breitbart. While the stock market is at all times highs and consumer confidence is at levels not seen since the 1980’s one has to wonder if this is a self-inflicted wound. While other companies are beginning to reap the benefits of the renewed consumer confidence, Breitbart is claiming victory in their feud with the embattled company.
In November of last year Kelloggs made the controversial decision to pull their advertising from Breitbart.com citing that the site’s readers were not “…aligned with our values as a company.” Swiftly striking back Breitbart leadership launched the Kelloggs boycott encouraging all 45 million monthly visitors to boycott the company, use the hashtag #dumpkelloggs to show their displeasure and sign a petition. The petition has just over 435K signatures and the hashtag trended on several occasions. The resulting firestorm was so bad that AdWeek acknowledged the impact of the Breitbart led boycott saying, “Kelloggs’ is facing a more sustained backlash after pulling its advertising.”
I do not know how much of the pain Kelloggs is experiencing was directly inflicted by Breitbart, but you have to attribute some of it to Breitbart’s sustained and powerful influence with their large reader base. While they may have continued to post losses you would have to assume they would not have had such a bad fourth quarter if they had not kicked the hornets’ nest. What responsibility does the executive leadership of Kelloggs bear to their shareholders, employees and customers for using the company platform to make a political statement that essentially isolated a good portion of the country? When is it time to hold those executives accountable for essentially throwing away shareholder money and company resources to advance their own political agenda?
Companies should be in the business of making money for their shareholders, employees and to provide the best possible product or service to their customer. When they engage in corporate virtue signaling they then tie the company to whatever political cause they just supported. As divided as America is currently in our politics, this means you are isolating potential customers regardless of which side of the argument you support. As a shareholder in many public companies I expect that they will keep business separated from the board of directors political views. As soon as I saw what Kelloggs had done I could not divest myself fast enough of the stock as I saw it as a poor move considering the sentiment of the country. When it is a publically owned company, executives should not gamble with the shareholder’s money or with their employee’s jobs.
Recently we have seen many companies stepping into the political arena. During the Super Bowl we saw several companies like AirBnB, Audi, 84Lumber, Google and Budweiser run deeply political ads. While many cheered these companies, others were turned off and vowed to never use their products again. Recently several outlets have announced that they will stop carrying any Ivanka Trump brands. Will what many are calling a purely political move hurt Nordstrom, Neiman Marcus, Belk, TJ Max and Marshalls? If this move hurts sales and their shareholders or employees pay a price, the heads of these organizations should be held accountable. There are plenty of organizations or ways that allow corporate American can be a good citizen without becoming political. Public companies that are answerable to you the stockholder should not be making political statements that risk your money or campaign donations that run the risk of turning off potential customers. If a corporation rolls the dice on making a political statement they have only themselves to blame when shareholders pull their money, employees are laid off and stores are closed.