By Chelsey Dulaney And Julie Jargon
General Mills Inc. on Wednesday reported weaker-than-expected
revenue in its latest quarter, as the maker of Cheerios cereal and
Hamburger Helper struggles with changing consumer tastes and a
strong dollar.
The Minneapolis-based company has been cutting jobs and closing
plants as it struggles with Americans' growing aversion to packaged
foods. General Mills said Wednesday that it expects its
cost-cutting efforts to save $285 million to $310 million in its
new fiscal year.
General Mills isn't alone--established food-and-beverage makers
such as Kellogg Co. and Coca-Cola Co. are also grappling with
lagging demand for their shelf-stable foods and sugary drinks, as
people turn to healthier, fresher options.
In June, General Mills announced plans to strip artificial
flavors and colors from the remaining 40% of its cereals that still
contain them, including Trix and Reese's Puffs.
The company this summer is also labeling five of its Cheerios
cereal varieties gluten-free and later this year plans to make
gluten-free Lucky Charms. Although the oats in its Cheerios and
Lucky Charms are naturally free of gluten--a protein mixture found
in wheat, rye, and barley to which some people are
allergic--General Mills developed a mechanical filter to separate
the oats from gluten-containing grains that can come into contact
with them.
"The reality of the changing food values of our consumers is
central to what we're doing," Chief Executive Ken Powell said in an
interview. "It's not just the elimination of gluten and artificial
colors, but the products we're launching are simpler."
The company has benefitted from its acquisition of organic-food
company Annie's Inc. last year for $820 million.
In the fiscal fourth quarter, U.S. retail sales grew 4.6% to
$2.55 billion.
In its international segment, sales fell 8.8% to $1.22 billion
on currency effects, which brought down sales growth by 18
percentage points.
Convenience stores and food-service-segment sales grew 3.9% to
$527.5 million.
General Mills reported a total profit of $186.8 million for the
quarter, or 30 cents a share, down from $404.6 million, or 65 cents
a share, a year earlier. Excluding restructuring-related charges, a
tax item and other special costs, earnings were 75 cents a
share.
Revenue ticked up 0.4% to $4.3 billion. Excluding currency
fluctuations, sales would have increased 6%.
Analysts polled by Thomson Reuters expected a per-share profit
of 71 cents and revenue of $4.53 billion.
Gross margin improved to 35.3% from 34.6% in the prior year.
The company forecast a mid- to single-digit increase in adjusted
earnings next year, excluding currency fluctuations, and flat sales
growth compared with the prior year.
Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com and Julie
Jargon at julie.jargon@wsj.com
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