General Mills Continues to Face Declining Sales

By Joshua Jamerson 

General Mills Inc.'s sales were hurt in the latest quarter by declines in its U.S. yogurt and convenience meal businesses, the latest sign that the food giant is struggling to lift demand amid shifting consumer tastes.

The Minneapolis company said fiscal third-quarter sales in its North American retail segment, the company's largest, fell 7% compared with a year ago, dragged down by double-digit declines in its U.S. meals and baking and yogurt categories.

The meals and baking category includes products under the Helper, Progresso, Old El Paso, Totino's, Betty Crocker and Pillsbury brands.

The decline in sales was larger than Wall Street expected, and shares fell 2.2% to $58.91 in premarket trading.

General Mills also booked $78 million in restructuring and impairment charges, which dented profit. However, excluding restructuring and other charges, the company's bottom line rose to 72 cents a share from 65 cents a share in the year-prior third quarter. Analysts polled by Thomson Reuters expected per-share profit of 71 cents.

Last month, the company cut an already-downbeat forecast for sales and earnings in its current year, blaming weak sales in the U.S. for yogurt and soup. General Mills has been trying to win back consumers who have ditched traditional processed foods like its Yoplait yogurt for more natural alternatives.

Lower food costs and other savings had for a while helped General Mills deliver solid earnings despite the lower sales, but analysts have raised concerns that sales declines are catching up with the cost reductions. On Tuesday, the company affirmed the financial outlook it provided last month.

Over all, for the quarter that ended Feb. 26, General Mills reported net income of $357.8 million, down 1.1% from $361.7 million in the year-ago period. On a per-share basis, net income rose to 61 cents a share from 59 cents, aided by a lower outstanding share count.

Net sales fell 5% to $3.79 billion, lower than analysts' estimates of $3.82 billion.

Selling, general, and administrative expenses declined 9% compared with the prior-year quarter.

Write to Joshua Jamerson at [e-mail]

(END) Dow Jones Newswires

March 21, 2017 09:22 ET (13:22 GMT)

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