Sales and profits at US cereal giant General Mills have fallen, as US consumers shy away from branded products.
Net sales slumped 8% to $4.4bn (£3.3bn) in the third quarter ending 22 February, as a six-point drop in sales resulting from the divestiture of its US and Canadian yoghurt businesses was met with a 3% fall in organic net sales.
The company’s North American Retail segment was hit hardest, with a 19% decline in volumes compared to the same quarter last year leading to a 14% decrease in sales.
Despite a boost to profits from the yoghurt divestitures, General Mills’ gross margin fell 3.1%, and operating profits slumped 41% to $525m.
The fall in sales and profits came amid efforts to turn around the branded giant, which manufactures household names such as Lucky Charms, Pillsbury and Cinnamon Toast Crunch.
Chairman and CEO Jeff Harmening said the company had expected the declines, as investments, divestitures and unfavourable timing comparisons all took their toll on the results.
Restating the company’s guidance for the year – organic net sales down 1.5%-2% and adjusted operating profit down 16%-20% – Harmening said he expected a return to earnings growth in Q4.
“As we move to the fourth quarter, we expect to deliver a step up in organic sales trends and return to earnings growth, driven by favorable timing comparisons, the 53rd week, and our continued market share momentum,” he said.
“And as we look ahead to fiscal 2027, with our price investment work behind us, we are confident in our ability to deliver improved organic sales results while continuing to generate industry-leading cost efficiency through our holistic margin management programme and our global transformation initiative.”
General Mills confirmed “strong innovation plans” and “investments to adjust base prices” across its US portfolio were underway to drive growth. The company said it had already driven initial improvements in volumes, with a return to dollar growth expected “after the initial price investment phase, when improved remarkability for consumers will drive stronger volume and favourable price/mix”.
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