By Joshua Jamerson
General Mills Inc. on Friday cut its already-downbeat sales and earnings forecast for its current year on weaker-than-expected sales U.S. yogurt and soup, further underscoring the company's challenges with soft consumer demand.
The company's stock skidded 4.4% to $58.85 in premarket trading.
The lowered outlook comes after the Minneapolis-based food giant already gave a grim performance projection as it struggles to win back consumers who have ditched traditional processed foods like its Yoplait yogurt for more natural alternatives. In December, the company said faltering sales of yogurt, Progresso soup and Pillsbury dough in the U.S. pushed the food giant's second-quarter profit down 9%.
General Mills now expects organic net sales for its current year, which ends in May, to fall 4% due to "a widening gap between the company's level of promotional activity and that of competitors in the U.S. yogurt and soup categories." The company previously projected an organic revenue decline of 3% to 4%.
General Mills said it now expected adjusted earnings growth of 5% to 7% from $2.92 in the prior year, down from a previous growth forecast of 6% to 8%. Analysts polled by Thomson Reuters projected full-year earnings of $3.08 a share.
General Mills executives have said the industry remains challenging, as U.S. food and beverage sales growth has steadily eroded over the past five quarters. Lower food costs and other savings had for a while helped General Mills and its peers deliver solid earnings despite the lower sales, but analysts have been concerned sales declines are catching up with the cost reductions.
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