Falling Yogurt Sales Drag General Mills' Earnings--Update

By Annie Gasparro 

General Mills Inc. said its revenue declined for the ninth straight quarter, as sales of Yoplait yogurt and cereal brands continued to sink.

Shares dropped 5% in premarket trading Wednesday, as the company's latest quarterly results fell below Wall Street expectations.

Chief Executive Jeff Harmening said in a statement that the quarterly results marked an improvement from the prior period, even though North America retail sales fell 5%. That was led by double-digit declines in yogurt sales and a 7% drop in cereal sales.

Mr. Harmening, who took the top job in June after decades at the company, has owned up to much of General Mills' struggles, saying they were "self-inflicted," through missteps like a lack of innovation and pricing its products too high.

General Mills isn't alone in its struggle to win back consumers who are increasingly looking for healthier and fresher brands. Mainstays in the packaged-food aisles are under pressure to reinvent their recipes and find ways to get their products into the fresh and refrigerated sections of the grocery store.

In recent years, General Mills 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.

In July, General Mills came out with what it calls a French-style yogurt to try to appeal to consumers who aren't coming back to the Yoplait brand. Oui is cultured for eight hours in the small glass jars it is sold in, and doesn't contain artificial flavors or preservatives.

General Mills' global sales fell 4% to $3.77 billion. On a comparable basis, revenue was down 4%, which is a significantly larger drop than its projected 1% to 2% decline for the fiscal year, which ends in May.

"We're confident that improved momentum will translate into stronger organic net sales results in the rest of year," Mr. Harmening said.

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 [e-mail]

(END) Dow Jones Newswires

September 20, 2017 08:57 ET (12:57 GMT)

Copyright (c) 2017 Dow Jones & Company, Inc.