In a week that saw two middle-aisle competitors snatch up “healthy” snack food companies,
General Mills yesterday released an upbeat earnings report for its fiscal 2018 second quarter with its 1% year-over gain in the North American retail segment primarily driven by a 7% increase in
cereal and 5% growth in its snacks unit in the U.S.
“General Mills has been in a prolonged cereal slump, but customers scooped up Lucky Charms, Cinnamon Toast Crunch, Reese's Puffs
and Cocoa Puffs last quarter, helping lift sales for the first time in more than two years,” Nathaniel Meyersohn reports for CNN Money. “The company said its new chocolate peanut
butter flavored Cheerios, which hit stores in October, were a quick hit.”
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Hey, they’re “made with real cocoa and real peanut butter.” And have 12 vitamins
and minerals.
“People are snacking more,” GM CEO Jeff Harmening tells the Wall Street Journal’s Annie Gasparro
in an interview, adding that GM believes 30% of cereal in the U.S. is eaten as a snack rather than a meal, up from 10% a decade ago.
“‘It’s probably one of the
reasons our cereals that taste really good are the ones that growing,’ he said. Sweeter, classic cereals like Lucky Charms and Cinnamon Toast Crunch are driving General Mills’ sales, while
its Fiber One brand struggles.”
But GM also “has been sprucing up its organic offerings to expand beyond its packaged foods portfolio,’ according to a Reuters
report published on CNBC.com. “The company said on
Wednesday it expects initiatives such as the launch of two flavors in its Shreds cereal and adding more fruit to its Original Style Yoplait yogurt to fuel sales growth in the second half of the
year.”
Overall, U.S. yogurt sales were down 11%.
“Continued declines for Yoplait Greek and Yoplait Light products were
partially offset by increasing benefits from the new Oui by Yoplait and Yoplait Mix-Ins product launches,” according to the company.
“As always,
executives saw products leap out during the quarter,” reports Evan Ramstad for the Minneapolis Star
Tribune. “A peanut butter-flavored Haagen-Dazs ice cream found an unexpected level of demand in Europe, Harmening said, considered surprising because peanut butter has traditionally been a
flavor that only did well in the United States. And Pillsbury Stuffed Waffles, a product that General Mills only sells in 7-Eleven, also made a strong debut.”
“People
are eating healthier and want organic and non-GMO and they want pure ingredients,” Harmening said, Ramstad reports. “Well, Stuffed Waffles is probably none of those things, but they taste
really good and they've got a job to do, which is fill you up in the morning. If you have a job that requires a lot of energy, you need something that fills you.”
All in
all, revenue rose 2.1% in the second quarter to $4.2 billion and things are looking better for the upcoming months, GM says. It revised its fiscal 2018 full-year organic net sales outlook based on the
better than expected year-to-date results. Organic net sales are now expected to range between flat and down 1%, compared to the previous range of a decline of 1 to 2%.
“I’m pleased with the breadth of the topline improvement we delivered this quarter across our geographies, product platforms, and channels. We’re executing better, with
stronger innovation, more effective brand building, and better merchandising leading to market share gains in the majority of our key global platforms,” crowed CEO Harmening.
Analysts were
positive, too, if a bit more reserved.
"I am ready to be cautiously optimistic about General Mills once again,” is the top takeaway in the summary for D.M. Martins Research’s analysis for Seeking Alpha.
“I continue to believe the stock has legs as the return to sales growth seems to be in its early stages,” the piece concludes.
Meanwhile, sure it’s a
multinational conglomerate with about 38,000 employees and $15.6 billion in fiscal 2017 net sales on six continents, but no doubt there’s a compelling human interest story to be tweeted about every one of
them.