Here’s How the Maker of Cheerios Is Planning to Win Back Thrifty Customers
The company noted that it is optimistic about sales in its new fiscal year.
Key Takeaways
- General Mills recently swung to a quarterly loss largely because of big charges tied to higher discount rates and the planned sale of its Brazil business.
- The company is trying to win back value-focused shoppers by leaning into sharper promotions and selective price reductions.
- General Mills executives say U.S. consumers had a difficult year and remain cautious, but they are optimistic that shoppers will come back due to new products and promotions.
General Mills executives recently said that they are upbeat about the year ahead and plan to lure back cost-conscious shoppers by cutting expenses and rolling out new products.
According to The Wall Street Journal, General Mills shares were up nearly 6% after the company reported its fiscal fourth-quarter results on Wednesday. The firm posted a loss of $2.01 billion in the quarter that ended in May, down from a profit of $294 million a year earlier. Overall, the share price has fallen by about 25% over the past 12 months.
However, executives are confident in the company’s progress.
“I can confidently say that we exited the year with a stronger foundation, with encouraging improvements in household penetration,” General Mills CEO Jeff Harmening told the Journal. “So I’m equally confident that fiscal 2027 will be a better year for General Mills.”
The company behind Cheerios and Annie’s Mac and Cheese has been absorbing higher costs to bring prices down as shoppers tighten their budgets. With most of those price reductions now in place, General Mills intends to shift its energy toward launching new items and campaigns that tap into demand for more healthful ingredients and different flavors.
Executives told the Journal that protein and fiber will be the company’s main priorities in the new year. General Mills is also investing in its pet food brands because customers have shown that they are willing to spend more for quality pet food. Revenue in General Mills’ pet division rose in the fiscal fourth quarter, while sales in its main retail business declined.
The company also intends to remove $3 billion in expenses by fiscal year 2030, seeking greater efficiency and countering the impact of inflation.
Why General Mills recently posted a loss
Most of the quarterly loss came down to accounting items rather than the day‑to‑day business, per the Journal. The company booked about $1.8 billion in charges tied to higher discount rates, and it also recorded a separate $1 billion hit on the planned sale of its Brazil operations, according to the outlet.
If those one-off charges are not counted, the underlying performance looks stronger than it does at first glance. Adjusted earnings came in at 95 cents a share, comfortably above the 80 cents Wall Street analysts were expecting, based on FactSet data. Revenue nudged up 1% to $4.61 billion, just ahead of the roughly $4.59 billion analysts had penciled in, per the Journal.
Still, the backdrop is challenging. Management said that the last fiscal year was rough for U.S. shoppers, who pulled back on spending. General Mills’ chief operating officer Dana McNabb doesn’t see consumer behavior snapping back quickly. In other words, even with better‑than‑expected adjusted results, General Mills is planning as if the cautious, value‑driven consumer is here to stay for a while.
“What we are anticipating is that as we go into this new fiscal year, the consumer is going to continue to be pressured,” McNabb told the Journal, adding that shoppers are probably going to keep chasing deals and grabbing items when they’re on sale.
Key Takeaways
- General Mills recently swung to a quarterly loss largely because of big charges tied to higher discount rates and the planned sale of its Brazil business.
- The company is trying to win back value-focused shoppers by leaning into sharper promotions and selective price reductions.
- General Mills executives say U.S. consumers had a difficult year and remain cautious, but they are optimistic that shoppers will come back due to new products and promotions.
General Mills executives recently said that they are upbeat about the year ahead and plan to lure back cost-conscious shoppers by cutting expenses and rolling out new products.
According to The Wall Street Journal, General Mills shares were up nearly 6% after the company reported its fiscal fourth-quarter results on Wednesday. The firm posted a loss of $2.01 billion in the quarter that ended in May, down from a profit of $294 million a year earlier. Overall, the share price has fallen by about 25% over the past 12 months.
However, executives are confident in the company’s progress.
