Better eat more Wheaties? General Mills sinks
The cereal maker and pet food giant reported sales that missed Wall Street's targets and a tepid outlook. Shares of General Mills and other food stocks fell on the news.
Want more evidence of how nervous the US consumer is? They’re apparently not eating as much for breakfast or splurging on their pets as much as they used to.
General Mills, the owner of the Wheaties, Cheerios, Chex, Cocoa Puffs and numerous other cereal brands as well as the Blue Buffalo line of dog and cat food, reported sales that missed forecasts and a weaker than expected outlook.
Shares of General Mills tumbled more than 5% in late morning trading Wednesday. Rivals Post and Kellogg were down 2% and 3% respectively while food giants Campbell Soup, ConAgra and Kraft Heinz were all lower as well.
The General Mills results are yet another sign of consumer spending fatigue due to more than a year’s worth of crippling inflation.
General Mills chairman and CEO Jeff Harmening said in prepared remarks for a conference call with analysts that the company’s customers “have remained resilient, due in part to average bank account balances, credit card debt, and unemployment levels that are more favorable than they were before the pandemic.” But he added that “we know from spending time with consumers that they are increasingly cautious about their financial future. This caution could have an impact on their at-home versus away-from-home food choices.”
Harmening also suggested that the next couple of quarters may be tougher than the past few, noting that General Mills is preparing for “a potentially more challenging economic environment.”
Sure, wealthier Americans may be traveling again now that pandemic worries have subsided. Delta just gave a solid outlook for example. But General Mills joins a growing list of consumer companies, such as retailers Walgreens and CarMax, that have warned of weak consumer spending and confidence.
The US shopper seems to be saying that they are getting close to being tapped out and will be more cautious going forward. Wall Street needs to recobgnize that reality.