Yogurt Sales Trends Are Souring For General Mills

Yogurt sales trends continue to weigh on General Mills, Inc. (NYSE: GIS). With no near-term revenue drivers on the horizon, CLSA analyst Michael Lavery remains bearish on General Mills stock.

According to Lavery, General Mills has set the bar fairly low with its fiscal 2017 guidance of -2 percent revenue growth and +6–8 percent EPS growth. CLSA believes the company could hit the low end of the conservative guidance, but upside is limited.

Despite easing comps, General Mills’ sales trends have been getting worse. Yogurt sales declines have accelerated in recent quarters, falling 16 percent in the past 12 weeks compared to 14 percent in the previous quarter. Lavery doubts this trend will reverse anytime soon.

“The need for investments in this category is clear and management has announced various initiatives, but none seem positioned as the type of ‘Big Idea’ that is likely needed,” he explained.

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General Mills is planning a re-launch of its Yoplait Greek 100 products as Yoplait Greek 100 protein in fiscal Q1.

Cereal sales haven’t helped General Mills’ cause recently. In the 12 weeks ending September 4, cereal sales fell 2.6 percent year-over-year (Y/Y).

CLSA maintains an Underperform rating on General Mills and a $65 price target for the stock.

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