General Mills’ Pet Segment Sees Overall Sales Growth
Not only did General Mills successfully transition Blue Buffalo into its portfolio, the company delivered its overall financial commitments in fiscal 2019, according to Jeff Harmening, chairman and CEO of the Minneapolis-based company.
General Mills purchased Blue Buffalo last year and has since been working toward improving its pet specialty business, including growing its distribution. At the end of April, shortly after Blue Buffalo rolled out in Walmart stores, the company’s distribution was at about 68 percent, up from the 65 percent originally predicted by the company, according to Harmening.
“We continue the momentum on Blue with retail sales of high single-digits led by the food drug and mass, or FDM, channel and strong growth in e-commerce,” Harmening said during the company’s Q4 2019 results earnings call on June 26.
Harmening noted that sales in the pet specialty channel were down double digits.
“[The pet specialty] channel remains important for Blue, and we’ll continue to partner with specialty customers to bring product variety, unique innovation and education to serve pet parents in the channel,” he said. “For example, we’re launching Carnivora, a new super premium product line under the Blue banner in the pet specialty channel later in this summer.”
Fourth quarter net sales for the pet segment grew 38 percent to $406 million, while operating profit of $110 million increased 82 percent. The “significant” fourth quarter profit increase was due to strong volume growth and positive price/mix, according to Don Mulligan, General Mills’ chief financial officer.
For the year, pet segment net sales of $1.43 billion increased 11 percent, while operating profit for the segment increased 11 percent.
Fourth quarter and full fiscal year results, which ended May 26, coincide with General Mills’ preliminary results that were reported during the 2019 Bernstein Strategic Decisions Conference in May.
Overall, General Mills’ net sales for the quarter increased 7 percent to $4.16 billion and were up 9 percent in constant currency, driven primarily by the addition of Blue Buffalo, according to company officials. Net earnings attributable to General Mills totaled $570 million compared to $354 million a year ago, reflecting higher operating profit and lower taxes and interest expense.
Year-to-date, net sales for General Mills increased 7 percent to $16.86 billion and were up 9 percent in constant currency, driven by the addition of Blue Buffalo, according to company officials. Net earnings attributable to General Mills totaled $1.75 billion.
“We’ll look to improve our performance again in fiscal 2020, and we have plans in place to accelerate our organic sales growth while maintaining our strong margins and cash discipline,” Harmening said.