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Could General Mills’ Sales Recover in Fiscal 2018?

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Sales expected to remain weak

General Mills’ (GIS) sluggish sales, resulting from a decline in the consumption of packaged foods in the US (SPY), has been affecting its top-line performance. Analysts expect the company’s sales to mark a slight decline in fiscal 2018.

Its fiscal 2019 sales are expected to recover slowly or at a marginal rate. General Mills’ top line has declined in the past nine consecutive quarters. Analysts project the upcoming fiscal 2Q18 to be no different with respect to its sales.

This trend isn’t encouraging for investors. Like most of its peers, General Mills’ innovation-led products are witnessing improved demand. However, weakness in North America is expected to take a toll on its top-line growth.

Kellogg (K), Campbell Soup (CPB), and J.M. Smucker (SJM) have also seen soft demand for their products in the US (SPY).

What’s affecting General Mills?

General Mills’ (GIS) organic sales are estimated to fall 1%–2% in fiscal 2018, reflecting lower volumes and net price realization in its North American business. The company’s yogurts and cereals sales are expected to decline, driven by weak demand. Meanwhile, its adverse mix is expected to subdue its growth.

Price wars among retailers and increased competition further pressure the company’s top-line growth. However, General Mills expects its sales to improve during the second half of fiscal 2018, reflecting new innovation-driven products backed by promotions. The effect of adverse currency movements could subside and support its sales.

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