General Mills posted earnings yesterday and the numbers did not look good. Reuters reports “General Mills Inc (GIS.N) reported a smaller-than-expected quarterly profit as yogurt and cereal sales declined in North America, sending the company’s shares down 9 percent to their lowest levels in nearly two years.”
The results will not do much to allay investors fears of a general decline in the company’s overall performance. “General Mills, which also owns brands such as Cheerios, Betty Crocker and Pillsbury, said gross margins dipped 1.5 percent to 34.8 percent in the first quarter, reflecting a 2 percentage points decline in pricing in North America.” Such steep declines can quickly become untenable and result in further losses.
“Lowering relative prices to drive volume in a rising cost environment, especially when competitors might selectively retaliate, seems like a tough project to estimate,” Consumer Edge Research analyst Jonathan Feeney said. “Through Q1, its proven more costly than expected.”
Investors could take a look at possible call opportunities should the situation not improve. Otherwise monitor the stock if you own it as it could be the beginning of your woes. To learn more, go to reuters.com. If you would like to get more updates such as these, sign up for our free newsletter down below.
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