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General Mills Misses 1Q18 Estimates, Stock Falls

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Part 3
General Mills Misses 1Q18 Estimates, Stock Falls PART 3 OF 6

General Mills’ Sales Continue to Fall: Yogurts, Cereals to Blame

Sales missed estimate

General Mills (GIS) continues to disappoint on its top line. The company’s sales of $3.8 billion fell short of analysts’ estimate and fell 4.0% YoY (year-over-year). Its revenue has fallen for the past nine consecutive quarters as continued softness in North America, mainly in sales of yogurts and cereals and retailers reducing shelf space for packaged foods, adversely impacted its top line. Organic sales fell 4.0%, reflecting lower volumes in North America and Asia & Latin America.

General Mills&#8217; Sales Continue to Fall: Yogurts, Cereals to Blame

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As consumers shift to fresh and well-being foods in the United States (SPY), retailers are reducing inventory and shelf space for packaged foods, which is hurting sales of processed food manufacturers.

In addition to General Mills, other food manufacturers, including Kellogg (K), J.M. Smucker (SJM), Campbell Soup (CPB), Kraft Heinz (KHC), and Conagra Brands (CAG), are also witnessing tepid sales due to a slowdown in demand.

However, confectionery and protein-rich foods are still seeing steady demand in the overall food space, which is driving sales for Hershey (HSY) and Tyson Foods (TSN).

Outlook

Going forward, GIS management remains upbeat and expects sales to improve on a YoY basis, driven by innovations backed by promotions. However, the challenging industry trend could restrict its sales growth rate. The company expects its organic sales to fall 1.0%–2.0% in fiscal 2018.

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