Packaged foods company General Mills (NYSE:GIS) fell short of the market’s revenue expectations in Q1 CY2025, with sales falling 5% year on year to $4.84 billion. Its non-GAAP profit of $1 per share was 4.1% above analysts’ consensus estimates.
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Revenue: $4.84 billion vs analyst estimates of $4.96 billion (5% year-on-year decline, 2.4% miss)
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Adjusted EPS: $1 vs analyst estimates of $0.96 (4.1% beat)
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Full-year guidance: Organic net sales are now expected to be down 2% percent to down 1.5%, compared to the previous expectation of the lower end of the range of between flat and up 1%
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Operating Margin: 18.4%, in line with the same quarter last year
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Free Cash Flow Margin: 8.8%, down from 14.7% in the same quarter last year
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Organic Revenue fell 5% year on year (-1% in the same quarter last year)
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Sales Volumes fell 4% year on year (-2% in the same quarter last year)
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Market Capitalization: $33.37 billion
“Our third-quarter organic net sales finished below our expectations, driven largely by greater-than-expected retailer inventory headwinds and a slowdown in snacking categories,” said General Mills Chairman and Chief Executive Officer Jeff Harmening.
Best known for its portfolio of powerhouse breakfast cereal brands, General Mills (NYSE:GIS) is a packaged foods company that has also made a mark in cereals, baking products, and snacks.
As America industrialized and moved away from an agricultural economy, people faced more demands on their time. Packaged foods emerged as a solution offering convenience to the evolving American family, whether it be canned goods or snacks. Today, Americans seek brands that are high in quality, reliable, and reasonably priced. Furthermore, there’s a growing emphasis on health-conscious and sustainable food options. Packaged food stocks are considered resilient investments. People always need to eat, so these companies can enjoy consistent demand as long as they stay on top of changing consumer preferences. The industry spans from multinational corporations to smaller specialized firms and is subject to food safety and labeling regulations.
A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years.
With $19.64 billion in revenue over the past 12 months, General Mills is larger than most consumer staples companies and benefits from economies of scale, enabling it to gain more leverage on its fixed costs than smaller competitors. Its size also gives it negotiating leverage with distributors, allowing its products to reach more shelves. However, its scale is a double-edged sword because there are only a finite number of major retail partners, placing a ceiling on its growth. To accelerate sales, General Mills likely needs to optimize its pricing or lean into new products and international expansion.
