MINNEAPOLIS — At-home consumption is taking the place of away-from-home products as General Mills’ stronghold, according to the company’s most recent financial reporting. Its pet segment, Blue Buffalo, continues to gain in market share and household penetration as it moves farther into the mass retail channel.
The company shared its fourth quarter and fiscal 2020 earnings July 1, reporting a net loss of $2 million in the fourth quarter of fiscal 2020 and a net loss of $8 million throughout fiscal 2020, caused by investment valuation adjustments. The company’s net sales increased 21% to $5 billion over the quarter and 5% to $17.6 billion for the total fiscal year ended May 31, 2020.
“Amid significant challenge and change in the world around us, General Mills adapted and executed in fiscal 2020 to deliver outstanding financial results while fulfilling our purpose of making food the world loves,” said Jeff Harmening, chairman and chief executive officer. “We’ve demonstrated extraordinary agility to meet the unprecedented increase in demand for food at home and to win across our categories.”
Operating profit was also up 16% to $830 million over the first quarter, with constant-currency operating profit up 24%. Full fiscal year operating profit was up 17% to $3 billion, with constant-currency adjusted operating profit up 7%.
In the pet segment, net sales grew 37% to $55 million over the fourth quarter and 18% to $1.69 billion over the fiscal year.
“We started the year knowing that improving growth in North America Retail segment and delivering another strong year in pet were going to be critical to accelerating our overall organic sales growth, and both our teams came through with great results,” Harmening said.
General Mills attributed its pet segment sales growth in the fourth quarter primarily to an extra month of financial earnings, which was added to align reporting with the company’s May 31 fiscal year end date, the company reported. The segment’s most recent annual earnings were recorded from April 2019 to May 2020, reflecting 13 months of sales instead of 12.
Increased Blue Buffalo sales were also caused by an increase in demand during the first half of the quarter due to pet owners stocking up. General Mills reported this demand bubble was largely deflated by the end of the quarter.
Blue Buffalo sales drove a 1.8% increase in household penetration in fiscal 2020, compared to fiscal 2019. Sales in the Food, Drug and Mass (FDM) channel saw double-digit growth, along with all-channel pet revenue, General Mills reported.
“In pet, we will continue to invest behind our BLUE brand to drive increased household penetration through compare and decide advertising, and we’re launching new advertising to strengthen awareness for our treat portfolio,” Harmening said.
“…we’ll continue to benefit from new products like Cat Bursts that launched in the past three months, and we look forward to an exciting [fiscal 2021] second-half innovation line-up focused on expanding our portfolio of wet food and treats,” he added.
General Mills continues to invest in e-commerce through channels including Walmart, Amazon, Chewy, Alibaba and Ocado. Online sales were up 3% in the fourth quarter, compared to the first three quarters of fiscal 2020.
The company reiterated its plans to ensure employee safety during the COVID-19 pandemic. It has implemented safety guidelines such as social distancing, PPE use, temperature screenings and hygiene checks based on recommendations from the World Health Organization (WHO) and Centers for Disease Control and Prevention (CDC), across all its facilities.
General Mills reported its manufacturing and distribution facilities “have continued to operate without significant disruption related to COVID-19.”
“As we turn to fiscal 2021, we’ll maintain a sharp focus on the near-term opportunity to meet continued elevated demand while continuing to advance our long-term strategies by investing to build our brands, strengthen our innovation, and enhance our strategic capabilities,” Harmening concluded. “I remain confident that General Mills will emerge from the pandemic a stronger company."
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