General Mills' (GIS) HMM Strategy Aids Despite Troubled Pet Unit

Core Insights - General Mills Inc. (GIS) is enhancing operational efficiency through its Holistic Margin Management (HMM) strategy, expecting to achieve cost savings of 5% of the cost of goods sold in fiscal 2024, up from the previous guidance of 4% [1] - The company is focusing on product innovation and brand marketing to strengthen its portfolio, introducing new flavors and expanding into the pet care market [3] - Despite overall growth strategies, the pet segment has faced challenges, with a 4% year-over-year revenue decline in Q2 fiscal 2024, primarily due to decreased pound volume and a shift towards more economical pet food options [5] Operational Efficiency - GIS has successfully implemented its HMM strategy to reduce costs and improve operational efficiency, focusing on waste elimination and supply chain optimization [1] - The company has made significant improvements in supply-chain efficiency, which is essential for product availability and cost reduction [2] Product Innovation & Brand Expansion - GIS is refreshing its product portfolio with new flavors and engaging consumers through brand marketing, which supports premium pricing strategies [3] - The company is capitalizing on the growing pet care market with new product launches and acquisitions, such as Tastefuls Purees and Fera Pet Organics [3] Challenges in the Pet Segment - The pet segment's revenues fell to $569.3 million in Q2 fiscal 2024, a 4% decline year-over-year, attributed to unfavorable economic conditions and a shift in consumer preferences [5] - Sales through Pet Retail channels experienced a notable double-digit decline, indicating the need for strategic adjustments to restore growth in this category [5] Financial Outlook - The Zacks Consensus Estimate suggests a 0.6% decline in current-year sales compared to the previous year, while earnings are expected to grow by 4.4% [6]