Dive Brief:
- General Mills reported an expected dip in net sales for the third fiscal quarter, down 8% to $4.0 billion, due in part to the Green Giant divestiture, which accounted for three points of that slide, and currency headwinds, accounting for another four points.
- Adjusted diluted earnings, excluding non-recurring costs, came in at $0.65 per share, which beat analysts' estimates of $0.62 per share. Net earnings increased 5.4% to $361.7 million as ongoing cost-cutting measures impacted the bottom line.
- General Mills also announced planned investments in expanding its gluten-free portfolio and reducing salt in its products.
Dive Insight:
Cereal, with its slide in recent year, continues to be a focus for General Mills. But sales may finally be turning around, as segment sales were up 1% in December and January compared to a 6% decline for the last quarter which ended in November, according to Nielsen data. Kellogg reported a similar resurgence for its morning foods segment, a 1.5% uptick in comparable net sales, in its earnings report last month.
However, analysts are challenging this outlook. Euromonitor estimates cereal to continue its sales decline through 2017, though the pace of decline is slowing.
Even if General Mills can make significant changes in its cereal business, there's still yogurt, another struggling category for the company. Yoplait's U.S. sales were down 15% in February, according to IRI.
Category struggles aside, General Mills has been making efforts to boost the health perception of its products. Most recently, this included announcing it would label GMOs across its portfolio and double its organic acreage sourcing. The company has tasked its 301 Inc. venture arm with looking outside of its brands for sales and investment opportunities, and it acquired EPIC Provisions, now under the Annie's business, earlier this year.