NEW YORK ( TheStreet) -- Lackluster U.S. sales from major packaged-food companies could be a sign of unsavory things to come in November when earnings are disclosed from Walmart ( WMT) , Target ( TGT) and other discount retailers.
Walmart obtains 56% of its annual sales from its grocery business, which consists of the type of dry goods and ready-to-eat foods sold by General Mills (GIS) and Campbell's Soup (CPB) . Target gets about 20% of its sales from its "food and pet supplies" segment that sells goods ranging from boxed cereal to ice cream to puppy chow.
General Mills relies on Walmart for 21% of its U.S. retail segment sales. According to Bloomberg supplier data, Target relies on products from General Mills for 3.37% of its sales and 0.95% of its costs of goods sold. Campbell Soup's five largest customers accounted for 36% of the company's consolidated net sales in 2013, according to its annual report. Walmart was 19% of Campbell's net sales last year. Target gets roughly 3.13% of its sales from Campbell's Soup, and 0.34% of its cost of goods sold, according to Bloomberg.
General Mills, the maker of Cheerios and Wheaties, had a disappointing first fiscal quarter, suggesting tepid consumer spending on the grocery items essential to the sales and profits at Walmart and Target.
Total sales came in at $4.27 billion, lower than the $4.38 billion Bloomberg consensus, with adjusted EPS totaling 61 cents, or 7 cents below expectations.
"Our results were driven by sales and profit declines in the U.S., where industry trends were weak in the quarter," said General Mills Chairman and CEO Ken Powell. The company reaffirmed its constant-currency growth targets for the fiscal year, but stated that "conditions in the U.S. market are more challenging than expected," which puts its targets at risk of not being achieved.