Despite rising costs General Mills, Inc. GIS is among the few food companies that are depicting robust performance on efforts to boost sales and generate higher savings. Well, such aspects are fueling investors’ optimism in the stock that has gained almost 17.6% in the past three months, against the industry’s decline of 6.3%. Let’s take a closer look at the factors aiding this Zacks Rank #2 (Buy) stock.
Consumer First Strategy & Benefits From Buyouts
General Mills is on track with the Consumer First strategy as well as key global growth strategies to boost sales. To this end, the company is focused on innovations, efficient customer marketing and strong in-store execution to sharpen competitive edge. The company’s next main strategy is to focus on driving growth across four differential global platforms — Haagen-Dazs ice cream, snack bars, Old El Paso Mexican food as well as General Mills’ natural and organic food brands.
Finally, the company is working toward reshaping its portfolio via prudent buyouts and divestitures. In connection with this, General Mills acquired Blue Buffalo Pet Products in April 2018 and is on track to integrate the same. We note that Blue Buffalo has emerged as one of the leading brands in the pet food category and is aiding revenue growth. The company continues to envision growth in this business in the forthcoming periods. Moreover, management plans expanding the Blue Buffalo product line in categories such as Drug, Food and mass channels. Apart from these, the company is focused on improving e-commerce channel considering its acceleration.
Prudent Cost Saving Strategies
General Mills is currently pursuing several initiatives to improve operational efficiency and generate cost savings. It expects to achieve cost savings through SKU optimization, supply chain optimization and continued expansion of zero-based budgeting across the business. These factors are expected to accelerate the company’s margins.
Further, the company is on track with the Holistic Margin Management (HMM) plan that is expected to generate greater savings this year. In fact, savings from this initiative aided margin expansions during the second quarter of fiscal 2019. Previously, management had stated that it expects cost of goods HMM savings of roughly $450 million in fiscal 2019. Notably, this will exceed the company’s year-ago savings and will be backed by global sourcing initiatives.
Together, these efforts are likely to continue providing cushion to the company from input cost inflation and costs related to growth investments in fiscal 2019. Moreover, the company’s dedicated focus on customer-led innovation and marketing are encouraging. All said, we expect this renowned food company to sustain in investors good books.
Greedy for Consumer Staples Stocks? Check These
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