Dive Brief:
- Fitch Ratings’ latest outlook for General Mills, Inc., shows a change in the company’s ratings from “stable” to “negative,” according to Food Business News.
- The downgrade is based on the foreseen risk for General Mills if it’s unable to stabilize revenue and grow earnings before interest, tax, depreciation and amortization after two years of decreasing global sales growth in categories like ready-to-eat cereal, yogurt and convenient meals.
- Fitch said that General Mills has seen sales drop in 13 of the last 14 quarters, and global sales for all the company’s product categories dropped between fiscal 2015 and fiscal 2016.
Dive Insight:
The outlook at General Mills hasn’t been very positive over the last couple of years, and Fitch has finally decided that the company can no longer rest on past laurels.
In March, the company’s latest earnings report revealed that net sales dropped 5.2% to $3.79 billion in its third quarter, missing Wall Street’s forecast of $3.82 billion.
General Mills has made several recent business changes to upgrade its outlook and profits.
Late last year, the company had a major shakeup of its global business structure, which it said was designed to promote growth and efficiency through more streamlined company leadership, maximized global scale and more agile operations.
Last July, General Mills committed to overhauling 60% of its existing yogurt portfolio by this summer, including making plans to explore more Greek yogurt offerings and nearby fast-growing subcategories like yogurt smoothies. The new products, which debuted this year, are a mix of new trendy ideas, like dipping snacks, and old favorites, like Yoplait's Custard Style yogurt.
Analysts believe that the company should work on bringing in new products to its roster and invest in alternative products that are in demand to help turn things around.