General Mills Slashes Outlook

The cereal company cuts its forecast for the fourth quarter and the full year as sales drop.

Author:: Michael Dunn
Publish date:: Apr 26, 2002 9:39 AM EDT

General Mills

slashed its fourth-quarter outlook by 42%, saying that sales came in well below previous expectations for the first two months of the quarter.

The cereal maker is now expecting fourth-quarter earnings of 25 cents a share, well below Wall Street's estimate of 43 cents a share, according to Thomson Financial/First Call. Sales on a unit basis are expected to fall about 4% from a year ago, reversing the company's previous expectations of low-single-digit growth.

For the full year, General Mills now sees earnings of about $1.70 a share, below the First Call estimate of $1.91. The company had previously forecast full-year earnings per share of $1.90 to $1.93 at the end of the third quarter.

The company said the economic recession was impacting its sales as grocers began inventory reduction efforts. Sales of dinner mixes and Pillsbury refrigerated dough both came in well below expectations.

Shares of General Mills were falling 7% to $42.15 on the news in premarket trading after closing at $45.30 Thursday.