2nd UPDATE:General Mills To End Some Products;Sees 2Q Charges
(Adds comments from a spokeswoman, in the second paragraph.)
By Anjali Cordeiro
Of DOW JONES NEWSWIRES
NEW YORK -(Dow Jones)- General Mills Inc. (GIS) expects to post $24.1 million
in restructuring expenses this quarter as it discontinues some of its smaller,
underperforming product lines.
The packaged food maker is discontinuing, not selling, the product lines, said
spokeswoman Heidi Geller. The company declined to name specific products that
are being cut, but Geller said the lines that will be affected are small and
that the company is cutting some product lines within brands and not entire
brands.
General Mills said the changes will allow it to focus on more profitable
products.
The changes made by General Mills aren't unusual. Large branded companies have
been cutting lower-performing brands and offerings, many of which are little
known and often steal shelf space from products in higher demand. Some of the
nation's largest retailers have been cutting back on their assortments in an
effort to simplify their shelves and sell more profitable offerings, putting
further pressure on manufacturers to focus on their best-selling items.
General Mills expects to complete its move by the end of the second quarter,
which concludes Sunday, and the company said that no employees will be affected.
The charge is consistent with its fiscal-year earnings forecast, which includes
an estimated $30 million in such costs, the company said in a filing Tuesday
with the Securities and Exchange Commission.
General Mills also said earnings including the restructuring charges should be
at least $1.43 a share. That is analysts' average estimate, according to Thomson
Reuters, and their figures typically exclude such charges.
The products affected generated about $35 million in net sales in the
company's last fiscal year. General Mills expects an additional $2.5 million of
exit costs in later periods.
The company's earnings have been boosted in recent quarters by moderating
commodity prices and strong sales of household products such as Hamburger
Helper, Multigrain Cheerios and Pillsbury cookie dough.
Shares of General Mills were trading recently at $68.51, up 17 cents.
-By Anjali Cordeiro, Dow Jones Newswires; 212-416-2200; anjali.cordeiro@
dowjones.com
(Tess Stynes contributed to this article.)
(END) Dow Jones Newswires
11-24-091246ET
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