Australia markets closed
  • ALL ORDS

    7,288.80
    -36.60 (-0.50%)
     
  • ASX 200

    7,032.50
    -38.50 (-0.54%)
     
  • AUD/USD

    0.7125
    +0.0017 (+0.24%)
     
  • OIL

    91.88
    -2.46 (-2.61%)
     
  • GOLD

    1,818.90
    +11.70 (+0.65%)
     
  • BTC-AUD

    34,456.34
    -450.86 (-1.29%)
     
  • CMC Crypto 200

    574.64
    +3.36 (+0.59%)
     
  • AUD/EUR

    0.6940
    +0.0061 (+0.89%)
     
  • AUD/NZD

    1.1028
    -0.0019 (-0.17%)
     
  • NZX 50

    11,730.52
    -29.49 (-0.25%)
     
  • NASDAQ

    13,565.87
    +273.89 (+2.06%)
     
  • FTSE

    7,500.89
    +34.98 (+0.47%)
     
  • Dow Jones

    33,761.05
    +424.38 (+1.27%)
     
  • DAX

    13,795.85
    +101.34 (+0.74%)
     
  • Hang Seng

    20,175.62
    +93.19 (+0.46%)
     
  • NIKKEI 225

    28,546.98
    +727.65 (+2.62%)
     

General Mills (GIS) Divests Yoplait, Boosts Accelerate Strategy

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
·4-min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

General Mills Inc. GIS divested 51% controlling interest in its European Yoplait operations to Sodiaal. The deal was initially announced on Mar 23. The company now has full ownership of the Canadian Yoplait business. GIS is likely to charge reduced royalty fees for using the Yoplait and Liberte brands in the United States and Canada.

The move is part of General Mills’ Accelerate strategy, which aims to boost profitability through geographic and product prioritization along with portfolio restructuring and enhancing shareholder returns in the long run. Keeping in these lines, it has acquired pet treats business Tyson Foods TSN and intends to offload its European dough businesses to Cerelia. Management anticipates concluding the transactions by the end of fiscal 2022. The divestitures will put the company a step closer to achieving the Accelerate strategy priorities.

What’s More?

General Mills has been gaining from three core priorities, including efficient competition, investments in brands and capabilities, as well as reducing leverage. With regard to its firstpriority, GIS has been prioritizing core markets, local gem brands and global platforms alongside utilizing its innovation and brand-building capacities.

As part of the second priority, GIS is on track with its Holistic Margin Management (“HMM”) and Strategic Revenue Management (“SRM”) initiatives. Also, management has been focused on reshaping the portfolio, investing in digital, e-commerce, and data and analytics, which appear to be promising areas. The three key priorities for fiscal 2022 are also in sync with the Accelerate strategy.

The company is keen on leveraging the ongoing pet boom. The acquisition of Blue Buffalo in fiscal 2018 is contributing to General Mills’ top line. The Blue Buffalo brand continued to drive solid retail sales growth and market share gains across measured channels in the first quarter of fiscal 2022. The Tyson Foods’ pet treats business acquisition also aided the company’s impressive Pet platform.

In the fiscal first quarter, net sales in the Pet segment grew 25% year over year on the back of solid volume growth as well as positive net price realization and mix. Net sales growth included 5 points of gains from the recently-acquired Tyson Foods’ pet treats business.

The recently-acquired pet treats business is expected to contribute 2 cents to the bottom line in fiscal 2022. The company’s investments in the Food, Drug and Mass (“FDM”) channel expansion are also working well for the segment.

Driven by these factors, shares of this Zacks Rank #3 (Hold) stock gained 7.6% in the past three months against the industry’s decline of 3.5%.

Zacks Investment Research
Zacks Investment Research

Image Source: Zacks Investment Research

However, the company is witnessing input cost inflation, supply-chain costs and fixed cost deleverage. Management expects total input cost inflation of 7-8% for fiscal 2022, up from the previously mentioned 7%, thanks to supply and demand imbalances, volatile weather, and challenges in transportation as well as labor markets.

Consequently, General Mills anticipates fiscal 2022 organic sales growth toward the higher end of the previously mentioned 1-3% decline. Adjusted operating profit growth (at cc) is expected toward the higher end of the earlier stated 2-4% decline. Adjusted earnings per share (EPS) growth at cc is envisioned at the greater end of the previous flat to down 2% range.

Stocks to Consider

We have highlighted some better-ranked stocks from the broader Consumer Staples space, namely Albertsons Companies ACI and Helen of Troy HELE.

Albertsons Companies currently sports a Zacks Rank #1 (Strong Buy). ACI has a trailing four-quarter earnings surprise of 37.6%, on average. Shares of Albertsons Companies have gained 17.1% in the past three months. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for sales for Albertsons Companies’ current financial year suggests year-over-year growth of 3.6%, while the same for earnings per share indicates a decline of 16.7% from the year-ago period’s reported figure. ACI has an expected long-term earnings growth rate of 12%.

Helen of Troy presently carries a Zacks Rank #2 (Buy). HELE has a trailing four-quarter earnings surprise of 19.8%, on average. Shares of the company have gained 2.9% in the past three months.

The Zacks Consensus Estimate for Helen of Troy’s sales and earnings per share for the current financial year suggests a decline of 15.9% and 16.2%, respectively, from the year-ago period’s reported numbers. HELE has an expected long-term earnings growth rate of 8%.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

General Mills, Inc. (GIS) : Free Stock Analysis Report

Albertsons Companies, Inc. (ACI) : Free Stock Analysis Report

Tyson Foods, Inc. (TSN) : Free Stock Analysis Report

Helen of Troy Limited (HELE) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting