Dive Brief:
- General Mills pledged to cut some $100 million in costs from operations after reporting disappointing earnings for the fiscal first quarter Wednesday. The packaged-food giant did not release details on the cuts.
- The cost-cutting promise came as the company reported a 25% drop in profit in its core business and an overall 5% drop in sales. Cereal sales fell 9%.
- Shares dropped 4.4% on the news.
Dive Insight:
General Mills didn't say exactly where it plans to cut costs, but the answer is pretty clear -- marketing. The company yesterday blamed marketing and promotions for the poor earnings performance, noting that sales fell even as marketing spending rose.
Or, as one analyst told the Wall Street Journal, General Mills and the rest of the industry have slipped into "a fairly self-destructive pattern of heavy promotional spending."