Why Is Cheerios Maker General Mills Stock Falling Today?

Shares of General Mills Inc GIS are down after the company reported its second-quarter FY24 earnings and revised its outlook to citing a slower volume recovery, reflecting a more cautious consumer economic outlook and a faster normalization of competitive on-shelf availability.

GIS reported a second-quarter sales decline of 2% year-on-year to $5.14 billion, missing the analyst consensus estimate of $5.35 billion. Organic net sales decreased 2%.

On a 2-year compound growth basis, net sales were up 1%, and organic net sales were up 4%.

North America Retail segment sales decreased 2% Y/Y to $3.3 billion. Pet segment sales dropped 4% to $569 million, while International segment sales increased 2% to $683 million.

Adjusted EPS of $1.25 beat the consensus estimate of $1.16.

Gross margin expanded 170 basis points Y/Y to 34.4%. Adjusted gross margin rose 180 basis points to 35%.

Operating margin expanded 50 basis points to 15.8%, and operating income for the quarter increased 2% to $811.8 million.

General Mills held $593.8 million in cash and equivalents as of November 26, 2023. Operating cash flow for six months totaled $1.5 billion.

"While we saw a slower-than-expected volume recovery in the second quarter amid a continued challenging consumer landscape, we generated bottom-line growth thanks primarily to strong HMM cost savings," said Chairman and CEO Jeff Harmening.

Outlook: General Mills cut its FY24 organic sales outlook from 3%-4% growth to range down 1%-flat.

The company revised FY24 adjusted EPS growth guidance from 4%-6% to 4%-5% in constant currency.

General Mills expects the largest factors impacting its FY24 performance to be the economic health of consumers, the moderating rate of input cost inflation, and the increasing stability of the supply chain environment.

Price Action: GIS shares are trading lower by 4.05% at $64.01 in premarket on the last check Wednesday.

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