General Mills Earnings: Consumer Weakness Drags on Sales, but Cost Management Protects Margins

Narrow-moat General Mills’ sales fell 2% in its (November-ended) fiscal 2024 second quarter, but cost management protected operating margins. The company expects more of the same for the rest of the fiscal year. As such, it cut full-year guidance for sales growth to negative 1% to flat, compared with up 3%-4%, and narrowed its adjusted operating growth and adjusted diluted EPS growth guidance to 4%-5% for both, cutting 1 percentage point off the top end. Our prior forecasts called for top-line growth of 3% and adjusting operating profit growth of 6%. We expect to cut our fair value estimate of $80 per share by a low-single-digit percentage amid continued consumer challenges, roughly in line with the intraday decline of about 3%.