General Mills Earnings Slightly Below Estimates As Generic Brands Provide Competition
General Mills (NYSE: GIS)on Wednesday reported its second quarter 2014 earnings. The company reported an EPS of $0.83, which came in five cents below the consensus estimate.
The company noted that its volume fell in the U.S. retail business, which accounts for around 60 percent of sales. Volume rose internationally, however.
The company's CEO Ken Powell noted a “strong slate” of new items will be introduced in the domestic market in the second half of 2014, as the company attempts to boost sales in a difficult environment. New productions include Yoplait-blended Greek yogurt, Fiber One 90-calorie lemon and cinnamon coffee cake bars, and El Paso Mexican frozen food items.
Janney Capital Markets Analyst Jonathan Feeney holds a bearish stance on shares. “The sustained weakness in U.S. retail volume growth – still down over the past five years – calls into question when investors will see a return to the company's historically dependable growth outlook.”
According to Barron's, General Mills needs to boost its market efforts as pricing wars continue to heat up. General Mills “spent less on advertising in the latest quarter, and that can't continue if it wants to maintain its leading share positions in attractive food categories like soup and yogurt,” Barron's wrote.
General Mills faces stiff competition from generic brands that offer similar products at a reduced price. A recent study by Consumers Reports suggests that supermarket, or generic brands, cost between 15 to 30 percent less than national brands.
© 2016 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.