North America continues to remain a drag
General Mills (GIS) continues to struggle in North America as lower volumes in yogurt and cereals continue to be a drag. During the reported quarter, net sales for the North America Retail segment, the largest segment in terms of sales and profitability, fell 5.0% to $2.4 billion, reflecting a 3.0% fall in volumes, coupled with a lower net price realization and mix. In comparison, the company’s peers Kraft Heinz (KHC), Campbell Soup (CPB), Conagra Brands (CAG), and Kellogg (K) are also witnessing lower sales in North America, especially in the United States (SPY).
Retailers shunning processed food due to a shift in consumer demand for fresh and healthy foods is negatively impacting sales.
During the reported quarter, US yogurt sales registered a double-digit decline, reflecting lower sales of Yoplait Greek and Yoplait Light products, offset in part by increased volumes of the newly launched Oui by Yoplait. Sales for cereals in the United States fell 7.0%, reflecting inventory reductions from retailers and unfavorable trade expense phasing. The snacks category saw a 2.0% fall in sales due to lower volumes of Fiber One, partially offset by increased sales of Lärabar and Nature Valley.
How other segments performed
Sales for GIS’s Convenience Stores & Foodservice segment remained flat at $0.50 billion as increased sales in the cereal and frozen meals categories were offset by a fall in yogurt and biscuits.
The company’s net sales in the Europe & Australia segment rose 3.0% to $0.50 billion as higher net price realizations and favorable currency movements more than offset the negatives stemming from lower volumes. Management stated that innovation-led new products, brand promotions, and geographic expansion resulted in higher sales. Häagen-Dazs ice cream, Nature Valley, and Fiber One snacks registered improved sales. Yoplait yogurt sales fell during the quarter.
Sales for the company’s Asia & Latin America segment fell 8.0% to $0.40 billion, reflecting a steep fall in volumes due to timing shifts in the reporting calendar year for Brazil.