Shares of General Mills Inc. (NYSE: GIS) experienced a 1.4% decrease in premarket trading on Wednesday, following the release of its fiscal second-quarter earnings report. Although the consumer-foods company exceeded profit expectations, revenue fell short and the full-year outlook was revised due to a slower-than-expected volume recovery.
Strong Profit Performance
General Mills, known for its popular brands such as Cheerios, Häagen-Dazs, and Betty Crocker, reported a net income of $595.5 million, or $1.02 per share, for the quarter ending on November 26th. This represents a slight decline from the year-ago period when the company recorded $605.9 million, or $1.01 per share.
However, when excluding nonrecurring items, adjusted earnings per share came in at $1.25, surpassing the FactSet consensus estimate of $1.16.
Revenue Misses Expectations
Sales for the second quarter experienced a 1.6% decline, totaling $5.14 billion. This figure fell short of the FactSet consensus estimate of $5.35 billion. The decrease in sales can be attributed to a four-percentage-point drop in volume, partially offset by a three-percentage-point increase in prices.
Revised Full-Year Outlook
Looking ahead to fiscal 2024, General Mills adjusted its previous growth guidance for organic sales. The company now expects organic sales to be down 1% to flat compared to the previous year. This contrasts with the previous guidance that indicated a growth range of 3% to 4%. General Mills attributed this revision to a slower volume recovery anticipated for fiscal 2024.
Stock Performance and Market Comparison
So far this year, General Mills' stock has experienced a decline of 20.4%, reflecting investors' concerns over the company's performance. In comparison, the Consumer Staples Select Sector SPDR ETF (NYSE: XLP) has slipped 4%, while the S&P 500 (INDEXSP: .INX) has seen a strong increase of 24.2%.
Despite the mixed results, General Mills remains a significant player in the consumer-foods industry and continues to innovate with its well-established brands. The company's ability to adapt and recover from current challenges remains an area of interest for investors and stakeholders alike.
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