General Mills' stock falls after revenue miss and soft guidance

By Ciara Linnane

Profit beat is offset in a 'more challenging operating environment'

General Mills Inc.'s stock fell 5.4% Wednesday after the consumer-foods company's fiscal fourth-quarter revenue fell short of estimates. The company also offered guidance that lagged consensus.

The stock was on track for its biggest one-day decline in two years. The last time it fell this much was May 18, 2022, when it fell 7.3%.

The parent of food brands including Cheerios, Häagen-Dazs and Betty Crocker (GIS) reported net income of $558 million, or 98 cents a share, for the quarter to May 26, down from $615 million, or $1.03 a share, in the year-earlier period.

Adjusted for one-time items, the company had earnings per share of $1.01, ahead of the 99-cent FactSet consensus.

Sales fell 6% to $4.714 billion, below the $4.853 billion FactSet consensus.

"We delivered on our updated guidance in fiscal 2024 by pivoting our plans and enhancing our efficiency in response to a more challenging operating environment," Chief Executive Jeff Harmening said in prepared remarks.

Looking to fiscal 2025, the company will work to accelerate organic sales growth and volume growth and pursue its "holistic margin management" cost savings to allow it to reinvest in growth opportunities, he added.

The company is now expecting fiscal 2025 organic sales - which exclude the impact of currency - to range from flat to up 1%. It expects adjusted EPS to be down 1% to up 1% on a constant currency basis, while FactSet is expecting a 3% rise.

By segment, North America retail sales fell 7%, pet sales fell 8%, North America food-service sales rose 4% and international sales fell 10%.

On a call with analysts, Chief Financial Officer Kofi Bruce said international sales were hurt by difficult market conditions in Brazil and China. in Brazil, sales were hurt by consumers who are still seeking value and customers were were reducing inventory "pretty significantly" compared with the year-earlier period.

In China, after a strong start to the year, the company saw a souring in consumer sentiment that hurt traffic for Häagen-Dazs and the company's premium dumpling business, he said, according to a FactSet transcript.

Elsewhere, consumers are still struggling with higher prices for many essentials, as inflation has remained higher for longer than many assumed, Harmening told analysts.

"Not in food necessarily. Actually, food inflation is actually coming down," he said. "But if you look at the broader macroeconomic environment, we're still seeing inflation of 3% to 4% in the broader environment. So the job is to create more value for our consumers."

Harmening said he's excited about a pending ad campaign for the company's pet-food segment, which will be launched next week. And in cereal, "we've got great taste news coming," he said.

That was already highlighted by Travis and Jason Kelce, he said, the sibling football legends whose profile has been raised this year by the romantic relationship between Travis Kelce and pop superstar Taylor Swift.

The company is also bringing back its Pillsbury Doughboy advertising mascot after a few years off the air, he said.

The company said its board approved a 2% increase in its quarterly dividend to 60 cents a share. The new dividend is payable Aug. 2 to shareholders of record as of July 10.

The stock has fallen 1.3% in the year to date, while the S&P 500 has gained 14.7%.

-Ciara Linnane

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06-26-24 1425ET

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