General Mills Cuts Sales Guidance. Consumers Keep Showing ‘Value-Seeking Behaviors.’

Net sales of $5.14 billion fell from the year-ago quarter and were below expectations for $5.35 billion. Within its North America retail and pet segments, net sales fell 2% and 4%, respectively, while net sales for North America foodservice were flat and international net sales jumped 2%.

“While many factors have evolved in line with our expectations —including moderating levels of input cost inflation and price/mix, as well as a return toward historical price elasticities — we’re seeing consumers continue to display stronger-than-anticipated value-seeking behaviors across our key markets, and this dynamic is delaying volume recovery in our categories,” said General Mills Chairman and Chief Executive Officer Jeff Harmening in prepared remarks for the earnings call.

The company reduced its fiscal-year guidance, saying it now expects organic net sales to range between down 1% and flat, compared to a prior call for 3% to 4% growth, “reflecting a slower volume recovery in fiscal 2024.”

Adjusted operating profit and adjusted diluted earnings per share were forecast to rise 4% to 5% in constant currency, narrower than an earlier estimate for 4% to 6% growth, “reflecting the impact of lower organic sales growth.”

Third Bridge analyst John Oh weighed in on the earnings report.

“As the return to positive volume growth is coming more and more into focus, our specialists have indicated that the road ahead for General Mills and the wider industry will be a challenging one and that it’ll likely only be until mid-calendar year 2024 when we start to see a positive outlook on volume growth,” he wrote.

“Our experts have also indicated that there’s likely no more room to push pricing with continued pushback and increasing pressure from retailers,” he added.

General Mills stock was off 2.7% to $64.91 in Wednesday trading. This year, shares are down 23%.

Write to Emily Dattilo at emily.dattilo@dowjones.com