General Mills topped analyst expectations for Q3, helped in part by a solid performance north of the border.
The maker of Cheerios, Lucky Charms, Annies and Betty Crocker reported a net sales drop of around 1% to $5.1 billion in the third quarter, compared with expectations of a decline of 3.1%.
Organic net sales grew in Canada, while net sales were up 8% in Canada, compared with a 2% rise in U.S. Morning Foods, and a 1% decline in U.S. Meals and Baking Solutions and 2% decline for U.S. Snacks, which includes brands like Larabar and Nature Valley.
Third-quarter net sales for the Pet segment were down 3% to $624 million, driven by lower volumes, partially offset by favourable net price realization and mix.
General Mills promised to increase its pet retail channel marketing investment, which includes the brand Blue Buffalo. It also promised to refresh its category brand communications.
General Mills chairman and CEO Jeff Harmening said on Wednesday that for the quarter, it continues to invest behind its brands at a mid-single-digit rate. It will “continue to keep its foot on the pedal,” when it comes to media spend.
The CPG also continued to invest behind core seasonal brands, including Pillsbury, Betty Crocker and Progresso. Harmening adds that Pillsbury’s media investment was up double digits behind its “two-ingredient” campaign, focused on easy meal solutions for busy families.
On the snacking side, in Wednesday’s earnings call Q&A, Harmening says it’s seen more at-home consumption, which remains higher than pre-pandemic, in an inflationary environment. He admitted to “having some struggles in bars,” but says Nature Valley is back to a growth position, and that “its marketing is working” for that brand.
The company, he says, is focused on driving long-term growth through brand-building, innovation and strong execution, which contributed to improved volume and market share trends for its business in the third quarter.
“We know we have more work to do, and we remain committed to investing further in our brands and capabilities to drive profitable growth over the long term,” Harmening says.
In terms of headwinds, the General Mills CEO noted that it is seeing increase in value-seeking behaviors from consumers, which is affecting both the channels they shop, and the size of their basket.