General Mills has temporarily closed nearly half of its Häagen-Dazs ice cream shops in China due to the rapid spread of the coronavirus.
General Mills temporarily closes nearly half its Häagen-Dazs shops in China due to coronavirus
The Golden Valley-based food maker reaffirmed its optimistic full-year guidance Tuesday despite challenges in Asia.
February 18, 2020 at 6:09PM
The Golden Valley-based food company told investors Tuesday the remaining company-owned shops are operating under severely restricted hours to abide by guidance from the Chinese government and various health agencies.
More than half of the China's nearly 1.4 billion citizens are under some form of travel restriction or quarantine mandate. The virus has claimed nearly 1,900 lives in the world's most populous nation.
"It's important to note that the safety of our consumers, employees and other stakeholders is our top priority," said Kofi Bruce, General Mills' new chief financial officer.
Nestlé owns the Häagen-Dazs brand in the United States and Canada while General Mills owns the brand internationally.
General Mills announced the impact on its China operations at the tail end of an otherwise upbeat presentation Tuesday morning at the Consumer Analyst Group Of New York conference in Boca Raton, Fla.
General Mills reaffirmed its full year guidance of growing organic net sales between 1% and 2%. If that holds, fiscal 2020, which ends in late May, will mark the first in several years where the company achieves real sales growth. General Mills reported a 4% sales decline in fiscal 2017 followed by two years of flat sales.
Many corporations are starting to warn investors that the coronavirus epidemic could negatively impact their bottom line. General Mills stopped short of doing so Tuesday, but said its full-year guidance excluded any potential impact from coronavirus.
"The rapidly evolving situation makes it difficult to quantify the full-year impact of the outbreak at this time," Bruce said.
He said the company would offer more details on the impact of coronavirus on its fiscal third quarter earnings call in mid-March.
China represents 4% of General Mills' more than $16.5 billion total annual net sales.
About 40% of China's sales, or around $264 million, come from its Häagen-Dazs and other food service outlets each year. Bruce said that these stores have higher costs and so a decline in sales there has a more significant impact on its profit relative to the Asia and Latin America business segment's overall profitability.
"We are continuing to assess the ongoing impact of the outbreak on our Asia business," he said.
Kristen Leigh Painter • 612-673-4767
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