Why General Mills Shares Are Sliding Today

General Mills Inc GIS reported fourth-quarter FY23 sales growth of 3% year-on-year to $5.03 billion, missing the analyst consensus of $5.17 billion. Organic net sales increased 5%.

North America Retail segment sales increased 2% Y/Y to $3.1 billion. Pet segment sales rose 7% to $655 million, while International segment sales fell 1% to $745 million.

Adjusted EPS of $1.12 topped the consensus of $1.07.

Gross margin contracted 180 basis points Y/Y to 34.4%. Adjusted gross margin rose 120 basis points to 35%.

Operating margin contracted 450 basis points to 16.3%, and operating income for the quarter was $818 million.

General Mills held $585.5 million in cash and equivalents as of May 28, 2023. Operating cash flow for the year totaled $2.8 billion.

The board of directors increased the quarterly dividend by 9% to $0.59 per share, payable August 1, 2023, to shareholders of record July 10, 2023.

General Mills Chairman and CEO Jeff Harmening said, "Led by our Accelerate strategy, our team successfully navigated a highly dynamic operating environment with agility, focus, and resilience."

“The strategy focuses on four pillars to create competitive advantages and win: boldly building brands, relentlessly innovating, unleashing scale, and standing for good.”

Outlook: General Mills sees FY24 Organic net sales growth of 3% - 4%.

The company sees FY24 adjusted EPS to grow 4% - 6% in constant currency from the base of $4.30 earned in fiscal 2023.

General Mills expects the largest factors impacting its FY24 performance will 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 4.02% at $77.65 in premarket on the last check Wednesday.

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