By Annie Gasparro and Micah Maidenberg
General Mills Inc. extended its sales slump after encountering poor demand for brands including Yoplait yogurt and Nature Valley granola bars.
The purveyor of classic packaged foods including Cheerios, Hamburger Helper and Betty Crocker cake mix has struggled to revive growth amid tougher competition from newer, trendier products and less costly store brands.
The company said Wednesday that comparable sales fell 1% in the latest quarter. But General Mills widened its profit margin in the quarter in part by raising prices. Shares fell 50 cents to close at $54.53.
"We got off to a slower start, but we're on the right track" Chief Executive Jeff Harmening said in an interview.
Like other large packaged-food companies, General Mills is facing pressure to sell foods perceived as healthier and fresher. Retailers have also introduced more of their own store-brand products, ramping up longtime competition.
General Mills has made some progress. U.S. cereal sales rose 1% in the quarter, indicating improvement from its yearslong efforts to revive the dying American breakfast tradition. And its yogurt sales in the U.S. were flat, compared with double-digit declines in the past.
"It's about making sure we give consumers what they want," Mr. Harmening said.
Part of its strategy has been to diversify its business. Last year, General Mills bought Blue Buffalo pet food for about $8 billion, giving it a foothold in the faster-growing pet-food category.
The company has been expanding distribution of Blue Buffalo products, including to Walmart Inc. stores, which helped its pet-food business log 7% sales growth to $368 million. Some analysts say competition is pushing pricing down and pressuring profit margins in pet food.
The company reported a quarterly profit of $520.6 million, compared with $392.3 million a year earlier. After adjustments, General Mills reported a profit of 79 cents a share, topping the 77 cents a share that analysts predicted.
Write to Annie Gasparro at firstname.lastname@example.org and Micah Maidenberg at email@example.com
(END) Dow Jones Newswires
September 18, 2019 16:46 ET (20:46 GMT)Copyright (c) 2019 Dow Jones & Company, Inc.