GIS General Mills Inc

By Annie Gasparro 

General Mills Inc. on Thursday said the initial surge in sales at the start of the pandemic is moderating but expects to benefit from consumers choosing to eat more at home for years as they continue to grapple with financial strain and work remotely.

"What we have learned from past recessions is that the first way consumers economize in their food budgets is by eating more at home," said Chief Executive Jeff Harmening.

Sales at General Mills' North America retail division, which includes U.S. groceries, rose 9% in the latest quarter from a year ago, after jumping 14% in the quarter that ended in August. Campbell Soup Co. last week reported a similar trend, with sales growth receding.

Still, General Mills and Campbells are among the companies continuing to bet on expectations that people will continue eating at home more than they used to long term.

Mr. Harmening said the company's research also shows that many consumers are enjoying the benefits of working from home and having more time with their families. "We expect more time at home to be an ongoing part of consumer routines," he said.

The pandemic has provided big food makers with an unprecedented opportunity to attract millions of new consumers who filled their pantries and refrigerators in the early months of the pandemic as dining rooms closed and they hunkered down at home. The companies said they want to capitalize on the momentum by investing in marketing and production capacity.

In the latest quarter, General Mills' sales rose 7% to $4.72 billion, topping analysts' expectation of $4.65 billion. Its adjusted earnings per share of $1.06 also beat Wall Street's estimate of 97 cents per share.

General Mills, which makes Cheerios, Yoplait yogurt, Progresso soup and more, said many of its brands have gained market share this year.

Mr. Harmening said improvements the company made to its ingredients and recipes before the pandemic have attracted consumers. For instance, General Mills had made changes to reduce sugar in its yogurt and add protein in its cereals.

Distributions of coronavirus vaccines in the U.S. began this week, injecting optimism that the end of the pandemic is in sight. However, case counts, hospitalizations and deaths from the virus continue to rise----a grim reminder of the virus' grip on the U.S. General Mills said it expects demand for its food to remain higher than normal until at least the spring, when its fiscal year ends.

"The widespread impact of vaccination will likely take time," Mr. Harmening said.

Write to Annie Gasparro at annie.gasparro@wsj.com

(END) Dow Jones Newswires

December 17, 2020 09:48 ET (14:48 GMT)

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