General Mills Sees Sales Gain Persisting From At-Home Dining

(Bloomberg) -- General Mills Inc. reported second-quarter sales that mostly beat analysts’ expectations, a sign consumers are still stockpiling their pantries as the global pandemic intensifies once again. It says the pace will continue into the third quarter, though next year’s outlook is too hard to predict.

• Net sales rose 7% to $4.72 billion, above the average estimate of $4.65 billion, in the quarter ended Nov. 29. The company said it continues to pick up market share amid elevated at-home food demand during the pandemic.

Key Insights

• General Mills’ boost from eat-at-home patterns is still going strong. The company reported increased demand in North America, especially for its meals and baking products segment, where sales surged 18%. Cereal was up 4% in the U.S. and yogurt sales rose 3%. U.S. snacks sales fell 2%, bucking the trend.
• That strength in at-home consumption was slightly offset by declines in the foodservice business, which missed analyst estimates. A 14% drop in this segment was due to a sharp pullback in demand at restaurants, schools, hotels and convenience stores.
• Packaged-food companies have been working overtime to keep shelves stocked amid the prolonged period of high demand. The maker of Wheaties and Progresso canned soup reported higher input costs in the quarter, including costs to secure incremental capacity.
• The company said the sales trends are persisting into the winter, predicting organic net sales growth in the third quarter similar to the second quarter’s growth rate. It also sees an adjusted operating profit margin roughly in line with the year-ago period. It declined to give a full-year sales or profit outlook, but said full-year adjusted operating profit margin “will be in line or better than the previous year.”

Market Reaction

• General Mills shares fell less than 1% at 9:35 a.m. in New York. They had gained 10% this year through Wednesday’s close.
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