Falling Yogurt Sales Drag General Mills' Earnings--2nd Update
September 20 2017 - 1:25PM
Dow Jones News
By Annie Gasparro
Yoplait yogurt is spoiling General Mills Inc.'s sales.
The company said its U.S. yogurt sales fell 22%, pushing it to
its ninth straight quarter of revenue declines.
Yoplait Light and Yoplait Greek 100 have suffered the most over
the past year, as Americans' shifted away from low-calorie diets in
favor of more natural, wholesome ingredients.
"The way people look at weight management has changed. They
aren't counting calories anymore," said Chief Executive Jeff
Harmening, in an interview. Artificial flavors and sweeteners, used
in Yoplait Light and Greek 100, "don't fit into that," he said.
General Mills isn't alone in its struggle to win back consumers
who are increasingly looking for simpler ingredients. Mainstays in
the packaged-food aisles are under pressure to reinvent their
recipes and compete with new, smaller brands that tend to produce
trendier items at a faster pace.
General Mills' shares were down 6% in Wednesday trading --
marking a 15% drop so far this year -- as the company's latest
quarterly results fell below Wall Street expectations.
Mr. Harmening said the company is working with "great focus and
urgency" to revive revenue growth through new, unique products like
a French-style yogurt it calls Oui by Yoplait.
Mr. Harmening, who took the top job in June after decades at the
company, said much of the trouble with yogurt has been a lack of
innovation in the last five years.
"There's been nothing wildly successful in yogurt since Greek,"
he said in an interview. And that began to take hold a decade ago
with the launch of Chobani yogurt.
General Mills recently came out with its Oui yogurt, which is
cultured for eight hours in the small glass jars it is sold in, and
doesn't contain artificial flavors or preservatives. Mr. Harmening
said new products like this, and new packaging that will make its
kids' Gogurt tubes easier to open, will improve its yogurt business
in the coming months.
General Mills' overall North America retail sales fell 5% in the
last quarter. U.S. yogurt contributed more than half of that
decline.
U.S. cereal sales, including brands such as Cheerios and Trix,
dropped 7%, as retailers sold existing inventory rather than buying
more from General Mills.
In the latest quarter, which ended in August, General Mills'
global sales fell 3.5% to $3.77 billion. On a comparable basis,
revenue was down 4%, worse than its projected 1% to 2% decline for
the fiscal year, which ends in May.
General Mills' profit of $408.6 million was down 2.6% from a
year ago. Excluding one-time items, adjusted earnings per share
came to 71 cents, below the FactSet consensus of 76 cents.
Write to Annie Gasparro at annie.gasparro@wsj.com
(END) Dow Jones Newswires
September 20, 2017 13:10 ET (17:10 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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