Entering text into the input field will update the search result below

Turnaround Efforts Make General Mills A Tempting Option

Jul. 05, 2017 9:22 PM ETGeneral Mills, Inc. (GIS)13 Comments
Bull's Run profile picture
Bull's Run


  • General Mills is significantly underperforming the market due to shrinking top-line.
  • General Mills lost 18% of its yogurt sales last year, but a turnaround is possible as the U.S. yogurt market is likely to grow at a CAGR of 4.6%.
  • The change in marketing strategy and new product lines focused on wellness trends will help stabilize sales in 2018.

General Mills (NYSE:GIS) ended its fiscal year 2017 on a lighter note with another sales decline of 6% and a modest 2% drop in bottom-line despite some aggressive cost cuttings. Although General Mills outperformed the consensus estimates, a deeper digging reveals that fundamental growth challenges remain intact. As a result, General Mills has massively underperformed the market, and its performance is likely to remain weak in the near-term as falling organic volumes overshadow small improvements in profit margins.

General Mills has stuck in a loop. The shrinking sales of cereals, yogurt, and meals & baking products are putting pressure on earnings and free cash flow. On the flip side, the aggressive reduction in distribution and advertising spending to improve profit margins is negatively impacting volumes and brand appeal in a very competitive landscape while consumer preferences have become highly dynamic.

Source: General Mills, North America Retail Segment

The U.S. yogurt market is consistently growing as opposed to cereals industry, which is suffering from a slump in breakfast cereals. However, the worst part is that General Mills has failed to compete despite increasing demand for breakfast yogurt and it is evident from a sharp 18% drop in yogurt sales during the fiscal year 2017.

According to Mintel, the U.S. yogurt market is likely to grow at a CAGR of 4.6% to reach $11.4 billion by 2021. However, General Mills needs a dramatic turnaround to avoid further loss of sales and market share. The company is releasing a French-style yogurt called Oui by Yoplait to disrupt the U.S. yogurt market. The French yogurt is relatively a new category in the U.S., and the success of Oui by Yoplait is uncertain at the moment. However, General Mills’ remarkable innovation capabilities in yogurt business combined with aggressive TV and digital marketing support will help it create a new premium

This article was written by

Bull's Run profile picture
Buy-side analyst having extensive knowledge and skills.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.