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This Analyst Chatted With General Mills CEO And CFO

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In an article published on TheStreet, Brian Sozzi of Belus Capital Advisors offered three reasons why "brighter days may be ahead" for General Mills, Inc. (NYSE: GIS)

Sozzi talked to the company's Chief Executive Officer Ken Powell and Chief Financial Officer Don Mulligan and concluded the following.

Sales And Pricing Trends

Sozzi noted that sales and profit strength at the company's convenience and food service segment contributed towards a better-than-expected third quarter. The segment sales its products to schools and hotels and saw a 6 percent sales boost while operating profit rose 11 percent.

Meanwhile, the company's U.S. retail business saw its pricing increase three percent in the quarter compared to a 1 percent decline in the previous quarter.

"As the year has unfolded, we have sought to re-balance the merchandise promotions we do in stores, and that has proved more impactful as the year has progressed," Mulligan told The Street. "We're looking at the inefficient trade that's not working, and are eliminating that."

Capitalizing On Acquisitions

General Mills acquired Annie's brand in September 2014 for $820 million and is now ready to "unleash the brand's evolution," according to Sozzi. The analyst added that Annie's brand has a "stamp of approval for discerning moms" given its health and wellness profile.

"It goes without saying the Annie's brand is very extendable to many other categories," Powell told The Street.

Sozzi continued that the first new products from Annie's will appear mid-summer in the form of organic soups. General Mills declined to comment on other products in the pipeline but did note that it is still working with Annie's team, still led by its Chief Executive Officer John Foraker and will have more to share in early July.

Shift To Higher Growth Areas

General Mills has introduced many new products as of late that fall in the health and wellness category that is ultra-hot. Items include Greek yogurt, reduced sugar Yoplait yogurt and a healthy version of Cheerios with quinoa.

In July, five Cheerios products will sell as advertised being gluten free including Original Cheerios, Honey Nut, Multi-Grain, Apple Cinnamon and Frosted.

"We will continue to pursue our strategy of adding to our portfolio in emerging markets, and in the U.S. in the wellness and natural areas," said Mulligan. General Mills, rumored to be readying a sale of its Green Giant frozen vegetable business, did not shy away from announcing a potential divesture. "We are constantly looking at our portfolio, and obviously we won't announce anything until we are ready to pull the trigger, but we continue to look on that side (divesture) as well," added Mulligan.

Latest Ratings for GIS

DateFirmActionFromTo
Sep 2020Credit SuisseUpgradesNeutralOutperform
Sep 2020Piper SandlerMaintainsOverweight
Sep 2020Morgan StanleyMaintainsEqual-Weight

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Posted-In: Belus Capital Advisors Brian Sozzi Cereal Don Mulligan Grocery HealthAnalyst Color Analyst Ratings

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