General Mills has reported results for its fiscal first quarter that fell short of market expectations, reflecting a nuanced landscape within the company and the broader market conditions. For the quarter that ended on August 25, the adjusted earnings per share (EPS) decreased to $1.07, down from $1.09 reported in the same period last year.
This figure, however, surpassed the consensus estimate by Capital IQ, which had projected an EPS of $1.06. In terms of sales, General Mills experienced a slight decline of 1% year over year, totaling $4.85 billion, which remained ahead of analyst expectations that had forecasted $4.8 billion. In addition, organic net sales also fell by 1%, a decline attributed to unfavorable pricing and a less favorable sales mix.
Chief Executive Jeff Harmening emphasized that the company’s primary focus for fiscal 2025 is to bolster organic sales growth. He noted, "Our top priority in fiscal 2025 is to accelerate our organic net sales growth, and we made expected progress on that goal in the first quarter along multiple fronts." He further elaborated that efforts to enhance consumer experiences have led to positive outcomes in volume, net sales, and market share trends when compared to the previous quarter. Breaking down the results further, North America was a mixed bag.
Retail sales saw a decline of 2%, bringing in $3.02 billion, primarily due to lower sales volume, although this was somewhat mitigated by price increases. The US snacks division faced mid-single-digit revenue declines, while US morning foods recorded low-single-digit losses. In contrast, the North American foodservice sales remained relatively stable year over year, registering at $536.2 million. When examining the pet food segment, sales in North America amounted to $576.1 million, slightly down from $579.9 million in the same quarter last year.
The segment recorded declines in net sales for both pet treats and wet pet food, while dry pet food sales held steady overall. On the international front, revenue saw marginal growth, edging up to $717 million from $715.8 million a year prior. This increase occurred despite adverse effects from lower prices and a two-point headwind from foreign exchange fluctuations. Looking ahead, General Mills continues to project that adjusted EPS for fiscal 2025 will be between a decline of 1% and an increase of 1% on a constant currency basis.
Similarly, full-year organic sales are anticipated to remain flat or show a slight increase of up to 1%. Analysts are estimating normalized EPS of $4.50, coupled with total revenue expectations of $19.92 billion for the fiscal year. Harmening concluded with an optimistic outlook, asserting the company’s commitment to enhance its competitive stance and regain its leading growth position across categories.
He reasserted confidence in their full-year outlook for fiscal 2025, stating, "Having delivered expected improvement in the first quarter, we are reaffirming our full-year outlook for fiscal 2025." In summary, while General Mills has faced challenges in its latest quarter, the management's strategic approach signals a determination to enhance performance and meet shareholder expectations moving forward..