We expect category pressure to constrain General Mills' top line, but think margins will improve.
We still see opportunity in shares of wide-moat General Mills following largely solid first-quarter results, including 9% sales growth (in line with our 9%-10% expectation for the year and including Blue Buffalo), with two-thirds of these gains driven by volume. While adjusted gross margin contracted 160 basis points to below 34%, this was largely due to a one-time purchase accounting charge related to the Blue Buffalo acquisition (130 basis point impact to gross margin), as well as industrywide...General Mills manufactures and markets branded consumer foods. The company's segments are: North America Retail, which provides cereals, refrigerated yogurt, soup, meal kits, dessert and baking mixes, frozen pizza and pizza snacks, grain, fruit and savory snacks, and organic products, among others; Convenience Stores and Foodservice, which provides snacks, yogurt, frozen meals and frozen dough products, and baking mixes, among others; Europe and Australia, which includes retail and foodservice businesses in the Europe and Australia region; Asia and Latin America, which consists of retail and foodservice businesses in the Asia and South America regions; and Pets, which includes pet food products.
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