Yogurt Declines Continue to Hurt General Mills
June 28 2017 - 8:34AM
Dow Jones News
By Austen Hufford
General Mills Inc.'s new chief executive said he would invest in
turning its sales declines around as struggling yogurt sales
continue to weigh on the company.
Revenue "fell well short of our standards," Chief Executive Jeff
Harmening said in a statement. "Our entire organization is moving
with urgency" to improve sales trends.
The Minneapolis-based food giant also acknowledged that margin
growth would suffer as it invests in efforts to restore sales
growth.
Still, shares were flat in premarket trading as the company's
latest quarterly results beat Wall Street expectations.
Gross margin fell to 34.7% in the quarter from 35.1%, as
unfavorable commodity impacts offset cost savings.
The company expects organic net sales, which excludes currencies
and deals, to continue to fall in the new fiscal year, declining 1%
to 2% in all. Organic sales fell 3% in the company's just-completed
fourth quarter.
Mr. Harmening recently took the top job at General Mills after
completing a transition plan where he pushed deals that targeted
consumer's hunger for fresh and natural foods.
The industry has been working to adapt to consumers who are
increasingly looking for healthier and fresher brands.
Lower food costs and other savings helped General Mills and its
peers deliver solid earnings on lower revenues for a time. Now
sales declines are catching up with them, and falling food prices
are sparking price wars on some products.
In the quarter, General Mills' North American retail sales fell
3%, driven by a double-digital fall in yogurt.
General Mills in recent years has made Cheerios gluten-free,
removed artificial colors from Trix cereal, bought Annie's
Homegrown natural and organic snacks, and removed aspartame from
Yoplait Light.
The company also raised its dividend by 1 cent to 49 cents, the
smallest increase since 2010.
In all, for the quarter that ended May 28, General Mills
reported net income of $408.9 million, or 69 cents a share, up from
$379.6 million, or 62 cents a share, in the year-ago period.
Revenue fell 3.1% to $3.81 billion.
Analysts polled by Thomson Reuters expected per-share profit of
71 cents and revenue of $3.75 billion.
Write to Austen Hufford at austen.hufford@wsj.com
(END) Dow Jones Newswires
June 28, 2017 08:19 ET (12:19 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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