MINNEAPOLIS — The rapid rise in at-home eating as a result of pantry stocking led to a surge in fourth-quarter sales and operating income within the North America Retail segment of General Mills, Inc., contributing to sharply higher full-year results at the Minneapolis-based maker of Big G cereals and Gold Medal flour.
Operating profit within the North America Retail unit soared 69% in the fourth quarter ended May 31, to $892.6 million, driven by a 36% spike in sales to $3.17 billion. In the full year, operating profit increased 15% to $2.63 billion, and sales rose 8% to $10.75 billion.
Overall, net income at General Mills in the year ended May 31 totaled $2.18 billion, equal to $3.59 per share on the common stock, up 24% from $1.75 billion, or $2.92 per share, in fiscal 2019. Net sales increased 5% to $17.63 billion from $16.87 billion a year ago.
“The significant surge in demand has reinforced the importance of supply chain excellence, something that has been a hallmark of General Mills for decades,” Jeffrey L. Harmening, chief executive officer, said on July 1. “We've increased the agility of our supply chain, including partnering with customers to prioritize production of key products to reduce downtime and increase capacity. With the uptick in consumers eating at home, we've seen broad-based improvements in household penetration for our brands, and we're encouraged by early indicators on repeat. And we've seen many more consumers buy their food online in recent months.”
Mr. Harmening said at-home food demand accelerated dramatically during the fourth quarter, contributing to the company’s US retail unit’s best full-year market share performance in a decade.
“This performance was led by our US meals and baking operating unit, which generated 68% retail sales growth in the fourth quarter, including strong results for Pillsbury refrigerated baked goods, Progresso soup, Totino's hot snacks, Betty Crocker desserts and Gold Medal flour,” he said.
In US Cereal, General Mills delivered its third consecutive year of retail sales growth and extended its leadership position in the category, Mr. Harmening said, gaining 70 basis points of share for the full year.
“This performance was due to strong brand building, especially across the Cheerios franchise, which grew retail sales and market share in Q4 behind the success of its heart health messaging,” he said.
In US Snacks, General Mills followed through on its goal to improve its focus on bars and fruit snacks.
“We drove 11% retail sales growth on fruit snacks behind increased capacity and exciting equities such as Disney's Frozen 2,” Mr. Harmening said. “And we made important improvement in our snack bars market share throughout the year, including share growth in the fourth quarter, led by improved innovation, merchandising and distribution for Nature Valley.”
In the company’s US Yogurt business, fiscal ’20 retail sales slipped 1% as General Mills continued to experience declines in the tail of its yogurt portfolio, including light and Greek varieties. But Mr. Harmening said the core yogurt business performed well, as retail sales of original-style Yoplait increased 5% and GoGurt rose 8%.
Because of the significant uncertainty in the balance of at-home versus away-from-home food demand, Mr. Harmening said General Mills is not providing guidance for fiscal 2021. The company has set three key priorities, though.
First, General Mills aims to compete effectively everywhere it plays. Second, General Mills will drive efficiency to fuel investment in its brands and in capabilities. Finally, the company will look to reduce its leverage to increase financial flexibility.
“To achieve our fiscal '21 priorities, we will need to focus across the enterprise in several key areas, including brand building, innovation and strategic capabilities,” Mr. Harmening said. “Bold brand building is the lifeblood of a consumer products company, and we have plans in fiscal '21 to advance our efforts to meet consumers where they are with purpose-driven brands.”
For example, Mr. Harmening said General Mills is renovating its entire Pillsbury Refrigerated cookie dough line to be safe to eat raw.
In fiscal '21 General Mills will continue to innovate across all aspects of its business. In US Snacks, General Mills is launching a new Nature Valley sustained energy bar, made with nuts, seeds and fruit and available in almond butter and blueberry and peanut butter and cranberry varieties.
In US Yogurt, General Mills has a number of new items coming to market in the first half of fiscal 2021, including a keto-friendly yogurt with 1 gram of sugar, 2 grams of carbs, 15 grams of protein and 15 grams of fat available in five different flavors, including strawberry, black cherry and coconut.
In focusing on strategic capabilities, General Mills plan to leverage its scale through fiscal '21 through enterprise capabilities like e-commerce, data and analytics, Mr. Harmening said.