Why Mondelēz Stock Is Losing Steam
Sales fell in the past 15 quarters
Mondelēz (MDLZ) has been reporting dwindling sales. The company’s sales have fallen in the past 15 consecutive quarters, reflecting lower volumes. Mondelēz has taken several strategic measures to accelerate its sales growth such as focusing on its “Power Brands,” innovation-driven new product launches, expansion into new markets, and expansion of distribution channels.
However, lower consumption of packaged foods as consumers shift towards healthy products, currency headwinds, and macroeconomic and geopolitical challenges in emerging markets will remain a drag.
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During the last reported quarter, Mondelēz International’s organic sales fell across all of its regions, partly due to the malware attack. Meanwhile, weak consumption in North America and challenges in the Middle East, China (FXI), and Brazil continue to restrict its top-line growth.
Going forward, Mondelēz expects to recognize delayed shipments due to the malware attack in 3Q17, which should boost its sales. Also, the company’s management projects its organic sales to improve 1% in 2017 on the back of its innovative product pipeline, in-store activity, and expansion of distribution capabilities including the e-commerce business and growing presence in discount chains and convenience stores.
However, lower volumes due to the slowdown in demand, adverse currency movement, the challenging business environment in emerging markets, and increased competition will remain a drag.