* 3rd-qtr sales $3.79 bln vs est. $3.82 bln
* Earnings per share $0.72 vs est. $0.71
* Expects FY organic sales to fall 4 pct
(Adds details, updates shares)
By Richa Naidu
March 21 General Mills Inc reported its
seventh straight decline in quarterly sales on Tuesday as the
maker of Cheerios breakfast cereal limited discounting in a bid
to boost margins, amid stiff pricing competition.
The company has been offering fewer discounts on products
such as Progresso soups and Pillsbury dough to cut costs, while
rivals have been slashing prices to compete for retailers'
The price gap with its competitors was one of General Mills'
"biggest challenges" so far this year, Chief Operating Officer
Jeff Harmening told analysts on a post-earnings call.
"We haven't had the promotion mix right and we haven't been
as competitive in pricing as we could have been," Harmening
General Mills said it was still cutting back on discounting
in the current quarter, but at a slower rate than it has so far
Retailers including Wal-Mart Stores Inc, Target Corp
and Amazon.com Inc are currently embroiled in a
price war that has made it crucial for them to stock cheaper
"2017 does seem to be developing into a 'tug-of-war' between
the retailers and food manufacturers, where pressure is mounting
on retailers to become sharper on price points," Bernstein
analyst Alexia Howard said on Monday.
The company's net sales fell 5.2 percent to $3.79 billion in
the third quarter ended Feb. 26, hurt by weak demand for its
yogurt and baking products. Sales fell short of analysts'
average estimate of $3.82 billion, according to Thomson Reuters
General Mills, like its competitors ConAgra Brands Inc
and Campbell Soup Co, has also faced lackluster
demand for processed foods as consumer tastes shift toward fresh
foods and items seen as healthier.
The company stood by its forecast for organic sales to fall
about 4 percent in the year ending May.
Gross margin increased 60 basis points to 34.5 percent of
net sales in the quarter.
Net income attributable to General Mills fell to $357.8
million or 61 cents per share, from $361.7 million or 59 cents
per share, a year earlier.
Excluding one-time items, the company earned 72 cents per
share, beating the average analyst expectation by a cent.
Minneapolis-based General Mills' shares were down 1 percent
at $59.99 in morning trading. They had fallen about 2 percent
(Reporting by Richa Naidu and Sruthi Ramakrishnan in Bengaluru;
Editing by Sai Sachin Ravikumar)