General Mills Lowers Sales, Profit Forecast
February 17 2017 - 9:10AM
Dow Jones News
By Joshua Jamerson
General Mills Inc. on Friday cut its already-downbeat sales and
earnings forecast for its current year on weaker-than-expected
sales U.S. yogurt and soup, further underscoring the company's
challenges with soft consumer demand.
The company's stock skidded 4.4% to $58.85 in premarket
trading.
The lowered outlook comes after the Minneapolis-based food giant
already gave a grim performance projection as it struggles to win
back consumers who have ditched traditional processed foods like
its Yoplait yogurt for more natural alternatives. In December, the
company said faltering sales of yogurt, Progresso soup and
Pillsbury dough in the U.S. pushed the food giant's second-quarter
profit down 9%.
General Mills now expects organic net sales for its current
year, which ends in May, to fall 4% due to "a widening gap between
the company's level of promotional activity and that of competitors
in the U.S. yogurt and soup categories." The company previously
projected an organic revenue decline of 3% to 4%.
General Mills said it now expected adjusted earnings growth of
5% to 7% from $2.92 in the prior year, down from a previous growth
forecast of 6% to 8%. Analysts polled by Thomson Reuters projected
full-year earnings of $3.08 a share.
General Mills executives have said the industry remains
challenging, as U.S. food and beverage sales growth has steadily
eroded over the past five quarters. Lower food costs and other
savings had for a while helped General Mills and its peers deliver
solid earnings despite the lower sales, but analysts have been
concerned sales declines are catching up with the cost
reductions.
Write to Joshua Jamerson at joshua.jamerson@wsj.com
(END) Dow Jones Newswires
February 17, 2017 08:55 ET (13:55 GMT)
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