General Mills Shares Fall on Sales Outlook as Shoppers Buy Less
General Mills products on sale at a store in White Plains, US.
(Bloomberg) -- General Mills Inc. shares sank in early trading on Wednesday on a disappointing sales outlook as shoppers continue to pull back amid climbing supermarket prices.
The company sees organic sales ranging between flat and up 1% for the current fiscal year, below the average analyst estimate of 1.18%. It expects volume trends will gradually improve in the current fiscal year but said dollar growth is expected to be below long-term growth projections.
Consumers have been cutting back on spending in recent months and buying less food. Some consumers are replacing branded goods with cheaper, private label versions, while others are simply making do with less — particularly for packaged foods. The company said it expects consumers to continue seeking value given the economic environment.
The shares fell as much as 4.8% in premarket trading in New York.
Among challenges for the maker of Cheerios and Old El Paso taco shells were that retailers are carrying less of its products. Volume in the fourth quarter fell 2 percentage points, with the largest decline in the pet and North America retail segments, though international volumes rose. Net sales were $4.7 billion, below the average analyst estimate.
Still, the packaged food maker said its margins improved, driven by cost savings internally, as well as some supply chain costs falling.
The Minneapolis-based company had trimmed its outlook for the year in December, projecting organic net sales growth in a range of flat to down 1%, compared with a previous range of 3% to 4% growth.
Most Read from Bloomberg
©2024 Bloomberg L.P.