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General Mills Inc.
is bracing for an uncertain year as consumers emerge from spending more time at home during the coronavirus pandemic and costs pick up.
The maker Cheerios cereal, Häagen-Dazs ice cream and other grocery products expects pandemic-fueled trends, such as the growth in e-commerce and the prospect of continuing remote work for some office employees, to have lasting effects on shopper behavior, Chief Executive
Jeff Harmening
said in prepared remarks Wednesday.
“We are ending one period of significant consumer disruption only to start another,” he said.
“
‘We are ending one period of significant consumer disruption only to start another.’
”
Inflationary pressures are expected to pose challenges for General Mills during its new fiscal year. The company anticipates logistics costs to rise by a double-digit level during the year, which began May 31, and expenses for raw materials and packaging to increase by high-single-digit levels, finance chief,
Kofi Bruce,
said.
As expenses increase, General Mills has already moved to raise prices and is working on cost-saving efforts. Other package-food manufacturers, including
Campbell Soup Co.
and
J.M. Smucker Co.
, also are facing higher costs and looking for ways to offset them, including through higher prices.
Overall, comparable sales are expected to fall 1% to 3% for the year, with profit for each share, after adjustments, coming in flat or possibly dropping as much as 2%, the company said.
General Mills shares rose 1.5% in morning trading.
For its latest quarter, the company said its profit fell to $416.8 million from $625.7 million a year earlier. On a per-share basis, earnings slipped to 68 cents from $1.02.
The company’s earnings after adjustments were ahead of analyst expectations, as were sales of $4.52 billion.
Demand fell off during General Mills’s latest quarter, which ended May 30, compared with the same period last year, when the onset of the pandemic in the U.S. set off a surge in food purchases.
Sales to retailers in the U.S. and Canada fell 17% year over year.
Sales in the U.S. for meals and baking products were off 30%, but demand for snacks held up better, declining 2%. Cereal sales in the market dropped 16%.
General Mills said it expects demand for food prepared in homes to decline year over year for most of its primary markets, but to remain above pre-pandemic levels.
“Conversely, away-from-home food demand is expected to continue to recover in fiscal 2022, though not fully to pre-pandemic levels,” the company said.
Write to Micah Maidenberg at [email protected]
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