General Mills, Inc. (NYSE:GIS) Q1 2024 Earnings Call Transcript - Page 4 of 4 - InvestingChannel

General Mills, Inc. (NYSE:GIS) Q1 2024 Earnings Call Transcript

Jon Nudi: I think you hit it well. I mean, at the end of the day, we believe in cereal, and we think it’s a great category. As Jeff said, it’s the most widely eaten breakfast in America today. As Jeff mentioned, we’ve been really performing well across the board, and we — plan to continue to do that. As Jeff said, we don’t need to grow a lot, we can grow a little bit and really like the way that the business runs for us and the P&L looks as well. So, we’re going to keep investing. We’re more excited today about cereal than we were even a decade ago. As Jeff mentioned, grew shares six of the last seven years. We’re the clear share leader today. And again, never have been in the history of the category into the last five years or so, and we’ll keep investing and keep growing the category.

The other question we get a lot is, what happens if one of our major competitors gets more focused? And what we would tell you is that’s actually a good thing. If you go back through history when the two major competitors in the category are supporting the category with marketing as well as innovation, the category does better. So, we hope that everyone comes to play and we can continue to grow those categories we move forward.

Rob Dickerson: All right, super. And then just a quick clarification question on Pet. A lot of the commentary is really around like Pet not really improving that much, as we get through the year, given the drivers relative to Q1. I believe last year, that in Q2, you did have a fairly pronounced inventory de-load. So, should we be thinking that kind of starts to revert out some to provide some tailwind to your volume dynamic in Q2 specific to Pet? Or is it basically maybe there was some de-load and then maybe a little bit of reload in Q3, but maybe some of that inventory is just kind of now being sold through kind of as normal without maybe the more traditional kind of year-over-year rebound from the dealer, if that makes sense? Thanks.

Jeff Harmening: It makes sense. I guess what I would say is that one of the things I’ve learned about Pet in the short five years that we’ve owned it, first of all, it’s a great category and brand, we’ve doubled the business, but also trying to go quarter-by-quarter on a business with this much e-commerce and everything else is a tough way to go. So, I’m not going to try to prognosticate what happens. But you do bring up the point. We had an inventory de-load last second quarter, that is true. We’re going up against that. But it’s also true that inventory is very quite a bit. And as the business has slowed down a little bit, inventory tends to come out of the system. And so, we’ll see what happens in the second quarter. But we’re not anticipating a big rebound in the second quarter from what we saw in the first quarter for — in order for us to hit our guidance.

Rob Dickerson: Got it. All right. Thanks so much.

Jeff Harmening: Thanks.

Operator: Our next question comes from Max Gumport with BNP Paribas. Please proceed.

Max Gumport: Hey, thanks for the question. As the industry starts to return to quality merchandising and with your own display support up mid-single digits, we’re hearing that the lists associated with some of these events, especially end cap displays, aren’t proving to be as incremental as it might have been anticipated. We’re wondering if you’re seeing this dynamic and also what you think is driving it. Thanks very much.

Jeff Harmening: Jon, do you want to comment on that?

Jon Nudi: Yeah, absolutely. So, as we look at merchandising [at large] (ph), I mentioned earlier, we see frequency up a bit, mid-single digits, but still down about 10% versus pre-pandemic levels. One of the things, as I mentioned before, we’ve invested in SRM capabilities. Our competition has as well and our retailers have also. So, as all of us are modeling the various pricing actions we can take, I think some of the tactics are different than maybe what we were doing pre-pandemic. I think we all know that driving deep discounts actually drives dollars out of the category and drives profit out of the category as well. So, what you’re seeing is maybe more frequency at higher price points and as a result of that, maybe the lift on each deal isn’t higher.

But at the end of the day, when you add up all of your merchandising across the year, a little bit more frequency with higher price points actually drives more dollars for the category and our retailers and more for us as well. So, you are right, we’re seeing slightly smaller lifts off of higher price points. But at the end of the day, we believe it’s a good thing for a category. And again, the big difference, I think, versus maybe in the past are the SRM capabilities that all of us have delivered — or developed and pretty sophisticated models now that we all can have a real good conversation with retailers on what to expect from a merchandising performance.

Max Gumport: Makes sense. Thanks very much. I’ll leave it there.

Jeff Siemon: Okay, Frank, I think we’re going to wrap it up there. Appreciate everyone’s time on the call this morning. I know we didn’t get to everyone, so please feel free to follow up with any questions throughout the day or the coming days. Look forward to continue to connect with you, and we’ll look forward to speaking again next quarter. Thanks so much.

Operator: That does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your line. Have a great day everyone.

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