The stock of General Mills (GIS) is down 5% after the cereal maker and packaged food company reported forward guidance that disappointed Wall Street.
The Minneapolis-based company announced third-quarter 2024 earnings per share (EPS) of $1.40 U.S., which topped the consensus expectation among analysts of $1.22 U.S.
Revenue in the July through September quarter totaled $5.20 billion U.S., which narrowly beat the $5.10 billion U.S. estimate on Wall Street. Sales were up 2% from a year earlier.
Management said that sales at its North American pet segment rose 5% to $596 million U.S. in the latest quarter while sales for its Foodservice segment increased 8% to $630 million U.S.
Despite the strong showing, the stock of General Mills is falling after the company slashed its forward guidance for the current fiscal year, citing “an uncertain macroeconomic backdrop.”
General Mills said it now expects earnings to decline between 4% and 2% for the full year, compared to a previous outlook of down 2% to flat.
Before these latest quarterly results, General Mills’ net sales had declined on a year-over-year basis for four consecutive quarters, while earnings were down for the past two quarters.
Packaged-food companies are facing challenges this year as consumers tighten their wallet amid persistent inflation pressure.
Many consumers have shifted their purchases from brand names products to cheaper private-label alternatives.
To compensate for the decline in food sales, the Cheerios maker has expanded in the pet food business, adding a series of new brands.
General Mills has also sold its North American yogurt business as it struggles to compete with Greek yogurt brands such as Chobani and Fage.
Prior to today (Dec. 18), the stock of General Mills had declined 1.23% this year to trade at $65.93 U.S. per share.
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