General Mills Reports Q1 Pet Segment Sales Growing in Mass, Sluggish in Pet Specialty
General Mills reported positive first quarter results in its pet segment, which was led by the company’s expansion into the food, drug and mass channel, said Jeff Harmening, General Mills chairman and CEO, during the company’s Q1 2020 earning call with investors.
“We’ve got good momentum on [the pet segment], and we’ve got good momentum on North America Retail, which are our most profitable businesses, and I don’t see any reason why that momentum shouldn’t continue into the second quarter as well,” Harmening said.
Net sales for the segment’s first quarter, which ended Aug. 25, increased 7 percent to $368 million. First quarter segment operating profit totaled $81 million, compared to $14 million in the year-ago period, which was driven by the $53 million purchase accounting adjustment in last year’s Q1 as well as higher net sales this quarter, according to Harmening.
Retail sales were up more than 100 percent in the food, drug and mass channel. Harmening attributed the uptick to the launch of Wilderness in last year’s fourth quarter.
Retail sales for food, drug and mass customers who have carried Blue Buffalo for more than 12 months were up 50 percent, compared to last year, Harmening said. General Mills purchased Blue Buffalo last year and has since been working toward improving its pet specialty business. However, retail sales and pet specialty continued to decline by double-digits in the first quarter, Harmening noted.
“This is an important channel for Blue, and we continue to support the channel through unique programs and innovation,” Harmening said.
One example, according to Harmening, is the recent launch of Carnivora, a new super premium product line under the Blue banner.
“We also have plans to execute exclusive programs in this channel later this year, including our new Baby Blue program, which we’ll tell you more about next quarter,” he said.
Blue continues to be steadfast in the e-commerce channel with retail sales up 20 percent in the quarter, resulting in further market share gains, Harmening said.
Overall company net sales slumped slightly for the first quarter, decreasing 2 percent to $4.0 billion. Net earnings attributable to General Mills totaled $521 million, up 33 percent from a year ago, primarily reflecting higher operating profit, a lower effective tax rate, and lower net interest expense.