General Mills Falls 26%: Can Earnings Stop the Slide?
Bloomberg's Week Ahead breakdown puts two embattled consumer staples giants under the microscope, and the numbers are not pretty
Ticker Ratings
If you enjoy watching companies squirm under pressure, earnings week of September 23rd is basically must-see TV. $GIS and $DRI both report, and Bloomberg's Week Ahead podcast made it pretty clear: neither is walking in with the wind at their back.
Let's start with General Mills ($GIS), which has shed 26% over the last 12 months. The bear case is not subtle. The company is getting squeezed from three directions at once: private label store brands are undercutting it on price, it's leaning harder on promotions and discounts to hold shelf space, and input costs including fuel are climbing. That's not a moat, that's a company treading water with ankle weights on. The key question Bloomberg's analysts are asking is simple: can General Mills actually return to growth? Right now the market is betting no.
Over at Darden Restaurants ($DRI), the story is a tale of two chains. Analysts watching Morgan Stanley and Evercore ISI data are cautiously optimistic on Longhorn Steakhouse, which appears to be putting up strong comparable sales numbers. The problem is that strong comps at Longhorn may need to bail out a softer quarter at Olive Garden, and rising beef costs are making the math on every steak dinner a little more complicated. Darden is essentially hoping its hotter brand can carry its iconic but struggling one across the finish line.
Here's what makes this earnings week genuinely interesting beyond the obvious: both stories are really the same story. Consumers are under pressure. Private label wins when budgets tighten. Casual dining traffic softens when the credit card bill arrives. The macro backdrop, including stubborn input cost inflation and a consumer that multiple YouTube channels are screaming is tapped out, is not doing either company any favors.
$GIS needs to show margin stabilization and at least a credible path back to volume growth. Anything less and that 26% decline starts looking like the beginning, not the bottom. $DRI needs Longhorn to keep cooking, because if Olive Garden misses and the steak side disappoints too, there's no narrative left to sell. Two companies, one uncomfortable week, and a market that has been very patient for very little reward.
Sometimes the most dangerous earnings are the ones where expectations are already low enough that everyone thinks the bar is easy to clear.