New not enough to drive General Mills sales

The worldwide introduction of 250 new items in the couldn’t help General Mills overcome other challenges that caused sales and profits to decline during the company’s first quarter.



Total company sales during the quarter ended August 24 declined 2% to $4.27 billion and earnings per share fell to 55 cents from 70 cents last year with the U.S. retail climate causing much of the company’s difficulties.



“Our results were driven by sales and profit declines in the U.S., where industry trends were weak in the quarter,” said General Mills chairman and CEO Ken Powell. “In addition, higher merchandising expense for our U.S. retail businesses in this period depressed reported net sales and gross margin."



Sales at the company’s U.S. division declined 5% to $2.44 billion while operating profits tumbled to $457 million from $612 million the prior year. Reasons cited for the decline were unfavorable price realization, mix, and lower volume.



“We made some important progress in the first quarter," Powell said. "In U.S. Retail, our Yoplait yogurt business returned to growth, with volume, sales, and market share gains. Several other key product lines including Big G cereals, grain bars, and fruit snacks achieved market share increases. Our cnvenience stores and foodservice segment generated sales growth and an 18% operating profit increase. And our International business segment posted 17% constant-currency profit growth with good constant-currency sales gains, notably in Latin America and Europe."



General Mills introduced more than 250 new items worldwide during the first quarter, including U.S. retail launches such as Cheerios Protein cereal, Chex gluten-free oatmeal varieties and new flavors of Yoplait Greek and Greek 100 yogurt. Other U.S introduction included Fiber One Streusel snack bars and Old El Paso Bold stand and stuff taco kits.