General Mills sales hit by low demand for Nature Valley, Fiber One bars

General Mills sales hit by low demand for Nature Valley, Fiber One bars

General Mills Inc on Wednesday reported quarterly sales below Wall Street estimates, hurt by declines in its U.S. snacks business.

FILE PHOTO: General Mills breakfast cereal is shown for sale in Carlsbad, California,
FILE PHOTO: General Mills breakfast cereal is shown for sale in Carlsbad, California, U.S., June 27, 2017. REUTERS/ Mike Blake/File Photo

REUTERS: General Mills Inc's quarterly sales fell short of Wall Street estimates on Wednesday, hurt by lower demand for its Nature Valley and Fiber One snack bars, sending its shares down as much as 10per cent.

Consumers have been moving away from granola and snack bars, once a staple breakfast food, as they become more conscious of high sugar content in them.

To counter slowing demand for packaged food, companies have been revamping and tweaking flavors and recipes to offer consumers healthier options.

General Mills, which makes Cheerios and Chex Mix, unveiled versions of its yogurt brands in sea salt caramel and dark chocolate raspberry flavors. It also refreshed store displays.

Still, sales of cereal and yogurt were flat in the quarter and that of snacks declined.

"We are very focused and frankly not satisfied with the performance on both Nature Valley and Fiber One, and that's really what we need to turn around in the coming year," Chief Executive Officer Jeff Harmening said.

Last month, Harmening noted that Fiber One, which used to be a part of the diet of half the U.S. population, is now only 2per cent.

The company said it would now focus on new variations of granola and snack bars, a strategy that has worked for yogurts.

"Last year our new product innovation (for Nature Valley) wasn't what we wanted it to be and we look to correct that this year," Harmening said in an interview with Reuters.

Organic net sales, which excludes revenue from acquisitions, fell 2per cent to US$2.34 billion in the quarter for its North America retail segment - its lowest in nearly three years.

For interactive graphic click link: https://tmsnrt.rs/2X7eHYt

Net sales rose 7per cent to US$4.16 billion, but missed the average analyst estimate of US$4.24 billion, according to Refinitiv IBES data. The rise was largely fueled by a 38per cent increase in sales of Blue Buffalo pet foods.

The company bought Blue Buffalo last year to diversify its portfolio and reduce its dependence on snack, cereal and yogurt businesses. It now expects Blue Buffalo's net sales to grow between 8per cent and 10per cent in fiscal 2020.

General Mills earned 83 cents per share, excluding one-time items, above the estimate of 77 cents.

(Reporting by Nivedita Balu in Bengaluru; Editing by Shinjini Ganguli)

Source: Reuters

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