(Reuters) – General Mills (NYSE:) on Wednesday reported a smaller-than-expected decline in quarterly sales, benefiting from improving demand after the Cheerios maker cut prices on some of its products.
General Mills and other packaged food makers have suffered declining sales in recent years as price-sensitive customers have rebelled against companies raising prices to combat rising raw material costs.
As a result, General Mills has been trying to lower prices over the past two quarters to boost sales volume, which was flat in the reported quarter but down 2 percentage points last quarter.
Prices fell 1 percentage point in the first quarter, compared with a 6 percentage point increase a year ago.
Chief Executive Jeff Harmening said consumers choosing home cooking to save money helped drive a 1% increase in U.S. retail sales in the third quarter.
The company expects volume trends to gradually improve in fiscal 2025, but expects full-year category dollar growth to be below its long-term growth forecast.
However, General Mills’ gross margins fell 130 basis points to 34.8% due to rising input costs and double-digit media investments.
General Mills Inc. said last week it was selling its North American yogurt business to French dairy companies Groupe Lactalis and Sodiaal for $2.1 billion and would focus on its core brands to attract value-seeking consumers.
The company’s quarterly sales fell 1% from a year ago to $4.85 billion. Analysts on average were expecting sales of $4.8 billion, down 2.11%, according to LSEG data.
On an adjusted basis, the company reported earnings per share of $1.07, beating previous expectations by 1 cent.
The company’s shares were up about 1% at the start of trading.
