General Mills Slashes Sales Guidance, Stock Falls

Shares of General Mills, the maker of Cheerios and other popular breakfast cereals, are taking a hit after the company lowered its sales guidance for the fiscal year. Despite posting fiscal second-quarter adjusted earnings of $1.25 per share, surpassing both the previous year's quarter and Wall Street's expectations, the net sales of $5.14 billion fell short of projections.

In a press release, General Mills Chairman and CEO Jeff Harmening acknowledged the slower-than-expected volume recovery in the second quarter, acknowledging the continued challenging consumer landscape. However, he highlighted that the company still achieved bottom-line growth due to strong holistic margin management cost savings.

As a result of the sluggish volume recovery, General Mills has revised down its fiscal-year guidance. Instead of the previously predicted 3% to 4% growth, the company now expects organic net sales to range between a 1% decrease and flat. This adjustment reflects the slower volume recovery anticipated for fiscal 2024.

Furthermore, adjusted operating profit and adjusted diluted earnings per share are forecasted to rise by 4% to 5% in constant currency, which is narrower compared to the earlier estimate of 4% to 6% growth. This revision is in line with the impact of lower organic sales growth.

Following this announcement, General Mills stock fell 2.3% to $65.21 in premarket trading. Year-to-date, the shares have already lost 20%.