By Micah Maidenberg
General Mills Inc. reported higher sales for its latest quarter, but growth was slower than in the spring, when consumers first quarantined at home amid efforts to curtail the spread of the coronavirus.
The maker of Cheerios, Nature Valley granola bars, Bisquick mixes and other foods on Wednesday said it generated $4.36 billion in sales for the quarter ended Aug. 30, up from $4 billion a year earlier and ahead of expectations from analysts.
On a comparable basis, which excludes currency fluctuations and the effect of deals, sales increased 10%. For the quarter ended in May, comparable sales jumped 16%, reflecting how consumers raced to fill up pantries and refrigerators as much of the economy closed down. The reopening of restaurants and easing of pandemic-related restrictions drove the slower pace, the company said.
"At-home food demand continues to remain elevated relative to pre-pandemic levels though it has moderated as we expected," Kofi Bruce, finance chief at General Mills, said at an investor conference earlier this month.
The packaged-food industry has caught a tailwind for much of this year because the pandemic reshuffled how consumers approached food. Families bought more groceries to eat at home amid closures of restaurants and capacity limitations on dining rooms.
More recently, consumers who had tapped enhanced unemployment benefits the federal government provided after the pandemic led to job cuts have pulled back on spending on food after that benefit expired in July. Others are shifting back to lifestyles that may include more eating out. Campbell Soup Co. said earlier this month that the pace of its sales growth had also moderated in its latest quarter.
General Mills reported $2.71 billion in quarterly sales for its business focused on selling food to retailers in the U.S. and Canada, up 14% year over year. The Minneapolis-based company said it saw stronger growth for products like refrigerated baked goods, dessert mixes and soup. Sales in the U.S. for its cereals rose 10%, but sales of snacks were down 2%.
Profit in the latest period rose to $638.9 million, or $1.03 a share, from $520.6 million, or 85 cents a share, the year earlier. The company's adjusted profit of $1 a share surpassed the 87 cents a share that analysts were looking for.
The company said it believes demand for food used in homes will remain higher than pre-pandemic levels in its current quarter, but warned that it had limited visibility into how long the heightened need would last.
"The magnitude and duration of elevated at-home food demand remains highly uncertain," it said.
The company said its unit serving convenience stores, restaurants and other food-service outlets continued to struggle in the latest quarter, with sales falling 12% to $392 million. Demand rose in markets overseas, including in its business focused on Asia and Latin America.
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