(Bloomberg) -- General Mills Inc.‘s sales in the latest quarter fell short of estimates, even after registering an increase from its recently acquired pet food brand, Blue Buffalo. The shares declined as much as 8.3% as of 9:34 a.m. in New York, the biggest drop since September.
Sales totaled $4.16 billion in the quarter ended May 26 -- short of the average estimate of $4.24 billion compiled by Bloomberg. The company said organic sales, which strips out items like acquisitions and currency effects, fell 1%.
General Mills is betting on the growing market for pet food for its future, but key parts of its business remains sluggish. North America retail sales, which include cereal, yogurt and snacks, posted a sales decline of 2%.The drop was steeper in Europe and Australia, where revenue fell 10%. The company cited a difficult comparison period from a year earlier, slowing demand for ice cream and challenges in France.Blue Buffalo is having an impact, however. Sales jumped 38% in pet food due to “significant distribution expansion.” The company earlier this month said it had opened a 400,000 square foot production plant to support the Blue Buffalo brand.General Mills is gunning for organic sales growth of 1% to 2% this year. The products it sees propelling this include Haagen-Dazs ice cream, snack bars, Old El Paso Mexican-style products and organic goods.
The shares fell to as low as $49.23 in New York trading on Wednesday. The company has outperformed the S&P 500 this year, gaining 38% this year through Tuesday’s close.
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