Minneapolis-based General Mills, Inc. (NYSE:GIS) is gearing up to launch a range of products across various segments, including cereals, yogurt, soup, and snacks, aiming to drive market share growth and meet evolving consumer preferences. Despite facing volume declines in segments like snacks and the pet business, the company is prioritizing consistent earnings and growth in the coming quarters.
The company is working on revitalizing struggling brands such as Progresso soup and Yoplait yogurt through innovation and more effective marketing strategies. General Mills anticipates EPS growth of 4-5% for the remaining fiscal year, supported by accelerated productivity savings, lower incentive compensation, and an aggressive stock buyback program. Despite macroeconomic uncertainties, management remains optimistic about the future.
While facing a decline in sales volumes in certain areas, General Mills expects this trend to stabilize in the upcoming quarters. With supply-chain conditions normalizing, the company aims to sustain a 4% rate of Holistic Margin Management savings. Efforts to control costs include SKU rationalization and the implementation of automation and AI technology in manufacturing.
To counter volume headwinds, General Mills is exploring new product lines and market segments to tap into emerging consumer trends and preferences. This diversification strategy aims to spark consumer interest and act as a hedge against volatility in specific product categories.
In addition to product diversification, the company emphasizes enhancing operational efficiencies. Continuous review and optimization of product lines ensure positive contributions from each segment to overall business performance. General Mills is also investing in technological advancements, particularly in artificial intelligence, to streamline production processes, improve efficiency, and contribute to cost savings.
Despite a 13.7% decline in the stock over the past three months, compared to the industry’s 6.3% decline, and underperforming the S&P 500 by 6.8%, investors are encouraged to consider accumulating the stock due to its latent value potential compared to the broader market’s growth. The Zacks Consensus Estimate for current-year sales indicates a 1% decline from the previous year, while earnings are expected to grow by 4.4%. Improvement in these metrics is anticipated in the next fiscal year.
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