Is General Mills' Weak Quarter A Sign Of Future Disappointment For Discount Retailers?

On Wednesday, General Mills Inc GIS reported weaker than expected earnings, missing analysts EPS estimates by 11.6 percent and missing revenue estimates by 2.5 percent.

Brian Sozzi of The Street, suggests that General Mills’ downbeat earnings may be a sign of unpleasant things to come for discount retailers such as Wal-Mart WMT and Target Corporaton TGT.

General Mills’ disappointing earnings report provides evidence of dull consumer spending on grocery items essential to Wal-Mart and Target revenues.

Campbell’s Soup Company CPB also reported downbeat earnings missing Street revenue estimates by 20 million, further questioning the strength of consumer spending.

Campbell Soup's CEO stated, "the industry is now in a period of profound change and challenge, and there has been a meaningful decline in the performance of the packaged food sector.”

Given that Wal-Mart receives 56% of its annual sales from its grocery business mainly consisting of packaged and processed foods; discount retailers may be susceptible to report a disappointing quarter.

Wal-Mart is set to announce fiscal second quarter earnings on November 20, pre-market.
Target plans to announce fiscal third quarter earnings on November 19, pre-market.