General Mills Inc. closed the books on its biggest year ever, selling $18.1 billion worth of cereals, yogurt and other packaged foods and beating expectations for its latest quarter.
But the boost that it got when the coronavirus pandemic shuttered society and led many consumers to eat more often at home is already ending, its results showed Wednesday.
While it earned $416 million in the quarter ending May 31, that and nearly every other financial metric was lower against the same period last year when pantry stocking was at its peak.
At that time, General Mills saw a 21% jump in sales, a stunning and momentary jolt to a firm accustomed to single-digit changes. Against that result, the company this spring experienced a 10% decline in sales to $4.5 billion, a level that still beat expectations and was 4% higher than the spring quarter of 2019.
Company leaders said Wednesday they expect at-home food consumption to remain elevated throughout the next 12 months relative to pre-pandemic levels. About 85% of General Mills’ food items cater to at-home eating while just 15% is sold into food service establishments, including schools and restaurants.
General Mills also surpassed consensus estimates with adjusted diluted earnings per share of 91 cents. It earned $1.10 a share in the same period a year ago.
General Mills stock dropped 1% in pre-market trading.
The company also revealed Wednesday more details about its corporate restructuring plan that led to mass layoffs, first reported by the Star Tribune, at its corporate headquarters at locations around the U.S.
In prepared remarks, Chief Executive Jeff Harmening said the restructuring was needed to “ensure we can deliver on the consumer behavior changes that were established or accelerated during the pandemic.” He cited e-commerce, data and analytics that drive marketing decisions and a renewed focus on mergers and acquisitions.
Director-level executives were the first to go in May. Last week, employees in mid-level management and lower were told whether or not they’d be retained. Between 700 and 800 U.S. and Canada workers were laid off, with the company taking a $170 million charge in the latest quarter to account for severance costs.
“This change is not simply a cost-cutting exercise,” Harmening said. “It’s allowing us to free up resources to continue to invest in growth-facing capabilities.”