GIS General Mills Inc

By Annie Gasparro and Micah Maidenberg 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (September 19, 2019).

General Mills Inc. extended its sales slump after encountering poor demand for brands including Yoplait yogurt and Nature Valley granola bars.

The purveyor of classic packaged foods including Cheerios, Hamburger Helper and Betty Crocker cake mix has struggled to revive growth amid tougher competition from newer, trendier products and less costly store brands.

The company said Wednesday that comparable sales fell 1% in the latest quarter. But General Mills widened its profit margin in the quarter in part by raising prices. Shares in the company declined 50 cents to close at $54.53.

"We got off to a slower start, but we're on the right track" Chief Executive Jeff Harmening said in an interview.

Like other large packaged-food companies, General Mills is facing pressure to sell foods perceived as healthier and fresher. Retailers have also introduced more of their own store-brand products, ramping up longtime competition.

General Mills has made some progress. U.S. cereal sales rose 1% in the quarter, indicating improvement from the company's yearslong efforts to revive the dying American breakfast tradition. And its yogurt sales in the U.S. were flat, compared with double-digit declines in the past.

"It's about making sure we give consumers what they want," Mr. Harmening said.

Part of the company's strategy has been to diversify its business. Last year, General Mills bought Blue Buffalo pet food for about $8 billion, giving it a foothold in the faster-growing pet-food category.

The company has been expanding distribution of Blue Buffalo products, including to Walmart Inc. stores, which helped its pet-food business log 7% sales growth to $368 million. Some analysts say competition is pushing pricing down and pressuring profit margins in pet food.

General Mills reported a quarterly profit of $520.6 million, compared with $392.3 million a year earlier. After adjustments, the company reported a profit of 79 cents a share, topping the 77 cents a share that analysts predicted.

Write to Annie Gasparro at annie.gasparro@wsj.com and Micah Maidenberg at micah.maidenberg@wsj.com

(END) Dow Jones Newswires

September 19, 2019 02:47 ET (06:47 GMT)

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