MINNEAPOLIS — General Mills continued to grapple with supply chain challenges in the third quarter of fiscal 2024, but remains hopeful that the coming quarters will see more supply chain stability, moderating inflation, and increased consumer confidence for shoppers in the United States.
On March 20, the company reported its third-quarter and year-to-date earnings for the three- and nine-month periods ended Feb. 26.
Pet segment sales were $624.5 million in the third quarter, down 3% year-over-year, largely impacted by volume. Nine-month sales for General Mills’ pet segment totaled $1.77 billion, down 2% year-over-year.
Volume was down 5% for the pet segment in the third quarter and down 7% over the first nine months of fiscal 2024. Third-quarter sales declines were seen in pet treats and dry pet food, which were partially offset by gains in wet pet food, General Mills reported.
“On wet pet food, we saw improved retail sales trends as we delivered better value to pet parents through multipacks and hitting key price points on our core can offerings,” said Jeff Harmening, chairman and chief executive officer of General Mills, in the company’s third-quarter earnings call on March 20.
However, operating profit for the pet segment remained in the positives, up 25% year-over-year to $128.3 million in the third quarter and up 10% year-over-year to $342.0 million over the first nine months of fiscal 2024. Operating profit gains were largely attributed to cost savings and favorable price/mix, partially offset by higher supply chain costs, input cost inflation, and elevated SG&A expenses, the company shared.
Segment operating profit as a percentage of net sales declined from the third quarter of 2023 to the third quarter of 2024 in all General Mills business segments except in pet. Segment operating profit as a percentage of net sales for pet was 20.5%, up 460 basis points year-over-year, while segment operating profit as a percentage of net sales was down 20 basis points for the company’s North America Foodservice division, down 110 basis points for North America Retail, and down 340 basis points for International.
Sales of General Mills’ pet brands in the pet specialty retail channel suffered in the third quarter, down in the double digits, while Food, Drug and Mass (FDM) sales were up in the low-single digits, and pureplay e-commerce sales were up in the mid-single digits, according to the company.
“…We saw a modest improvement in Blue Buffalo’s US retail sales trends in the third quarter, compared to the second quarter of the fiscal year,” Harmening said. “Much of this improvement was attributable to the performance of our Life Protection Formula [LPF] dry dog food line, which saw Nielsen-measured pound volume increase 8%. LPF returned to dollar share growth in the quarter, driven by the effectiveness of our ingredient superiority advertising.”
The company expects to continue to drive volume and share growth for its Blue Buffalo Life Protection Formula, as well as build on wet pet food retail. Additionally, Blue Buffalo’s Wilderness line will reveal a “marketing refresh” in the fourth quarter of fiscal 2024.
Overall, General Mills posted $5.1 billion in net sales in the third quarter, down 1% year-over-year. Operating profit was reported at $911 million, up 25% year-over-year, and diluted earnings per share (EPS) were up 27% year-over-year to $1.17.
The company also reaffirmed its fiscal 2024 guidance, expecting organic net sales to be flat or down 1%, and adjusted operating profit and adjusted diluted EPS both up between 4% and 5%.
“General Mills’ strategic focus on brand building, innovation and in-store execution contributed to improved volume and market share trends in the third quarter,” Harmening stated. “We continue to navigate today’s evolving operating environment while generating industry-leading levels of cost savings. And we remain committed to investing further in our brands and capabilities to drive profitable growth over the long term.”
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