General Mills, a well-known food manufacturing company, is experiencing a decline in sales as consumers are buying fewer of their products. This downward trend has caused the company’s stock price to fall by 3.6%. The CEO of General Mills, Jeff Harmening, attributes this decline to consumers seeking better value and a return to historical price elasticities.
Analysts have also suggested that General Mills has limited room to raise prices due to pushback from consumers and pressure from retailers. This presents a challenge for the company as it anticipates slower growth in the future, even predicting that sales may not grow at all through the next summer.
Despite these challenging times for consumers, General Mills has not seen the expected boost in sales as people continue to eat out less and do not buy more groceries. The company also faces competition from other brands returning to shelves after supply chain disruptions.
To combat these obstacles, General Mills plans to focus on advertising and in-store promotions to boost its brands and regain market share. The company believes that heavy advertising and innovative products will help improve results in the future. However, General Mills denies losing customers to weight-loss drugs and states that there is no evidence of such an impact on their business.
In an effort to offset inflation and reduce costs, General Mills also aims to trim expenses by potentially bringing more production in-house and streamlining manufacturing processes. Despite reporting a 2% decline in both profit and sales for the fiscal quarter ending in November, the company beat analyst expectations on adjusted earnings. However, this did not prevent a significant drop in its stock price.
Looking ahead, General Mills projects sales growth for the remainder of the fiscal year to be flat to 2%, with adjusted earnings potentially growing by 4-5%. Analysts suggest that volume growth will be crucial for General Mills’ future success, but a positive outlook may not be seen until mid-calendar year 2024. Overall, General Mills is facing challenging times but remains optimistic about its ability to bounce back with the right strategies in place.
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