General Mills Reports Stronger Sales, But Growth Moderates -- Update
September 23 2020 - 7:52AM
Dow Jones News
By Micah Maidenberg
General Mills Inc. reported higher sales for its latest quarter,
but growth was slower than in the spring, when consumers first
quarantined at home amid efforts to curtail the spread of the
coronavirus.
The maker of Cheerios, Nature Valley granola bars, Bisquick
mixes and other foods on Wednesday said it generated $4.36 billion
in sales for the quarter ended Aug. 30, up from $4 billion a year
earlier and ahead of expectations from analysts.
On a comparable basis, which excludes currency fluctuations and
the effect of deals, sales increased 10%. For the quarter ended in
May, comparable sales jumped 16%, reflecting how consumers raced to
fill up pantries and refrigerators as much of the economy closed
down. The reopening of restaurants and easing of pandemic-related
restrictions drove the slower pace, the company said.
"At-home food demand continues to remain elevated relative to
pre-pandemic levels though it has moderated as we expected," Kofi
Bruce, finance chief at General Mills, said at an investor
conference earlier this month.
The packaged-food industry has caught a tailwind for much of
this year because the pandemic reshuffled how consumers approached
food. Families bought more groceries to eat at home amid closures
of restaurants and capacity limitations on dining rooms.
More recently, consumers who had tapped enhanced unemployment
benefits the federal government provided after the pandemic led to
job cuts have pulled back on spending on food after that benefit
expired in July. Others are shifting back to lifestyles that may
include more eating out. Campbell Soup Co. said earlier this month
that the pace of its sales growth had also moderated in its latest
quarter.
General Mills reported $2.71 billion in quarterly sales for its
business focused on selling food to retailers in the U.S. and
Canada, up 14% year over year. The Minneapolis-based company said
it saw stronger growth for products like refrigerated baked goods,
dessert mixes and soup. Sales in the U.S. for its cereals rose 10%,
but sales of snacks were down 2%.
Profit in the latest period rose to $638.9 million, or $1.03 a
share, from $520.6 million, or 85 cents a share, the year earlier.
The company's adjusted profit of $1 a share surpassed the 87 cents
a share that analysts were looking for.
The company said it believes demand for food used in homes will
remain higher than pre-pandemic levels in its current quarter, but
warned that it had limited visibility into how long the heightened
need would last.
"The magnitude and duration of elevated at-home food demand
remains highly uncertain," it said.
The company said its unit serving convenience stores,
restaurants and other food-service outlets continued to struggle in
the latest quarter, with sales falling 12% to $392 million. Demand
rose in markets overseas, including in its business focused on Asia
and Latin America.
Write to Micah Maidenberg at micah.maidenberg@wsj.com
(END) Dow Jones Newswires
September 23, 2020 08:37 ET (12:37 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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