General Mills Inc. GIS recently announced the elimination of 675 to 725 jobs under its restructuring program called Project Compass. The packaged food company intends to generate savings of $45 million to $50 million a year by reducing administrative expenses across its international business. The process is expected to be completed by early fiscal 2017.
The decision to cut jobs is a harsh one for the company. However, this Minneapolis-based company has been struggling with soft sales due to changing consumer preference. There is are growing number of health-conscious customers who are extremely conscious about the nutritional value of their packaged food products. The company also expects softer sales growth in fiscal 2015. The job cuts will help the company to save on expenses, thus boosting margins and profitability of the company.
Not only this, the company has been taking several initiatives in order to drive profits and revenues.
Of late, the company intends to focus on the growing demand for healthier packaged food. Earlier this week, the company revealed that it will launch its healthier version of Trix and Reese's Puffs cereals in the winter of 2015. This is a part of the company’s commitment to remove artificial flavors and colors from most of its cereals. (Read: General Mills to Stop Using Artificial Ingredients )
The company has already implemented this nutritional change in more than 60% of its cereals, including Cinnamon Toast Crunch and Original Cheerios. The company intends to remove artificial flavors and colors from more than 90% of its product portfolio by 2016 end and complete the process by 2017. This transformation should drive sales in the long term.
General Mills carries a Zacks Rank #2 (Buy).
Other Stocks to Consider
Investors interested in the food industry can also consider stocks like Fufeng Group Limited FFNGY, Campbell Soup Company CPB and BRF S.A. BRFS. While Fufeng Group Limited sports a Zacks Rank #1 (Strong Buy), Campbell Soup Company and BRF S.A. hold a Zacks Rank #2 (Buy).
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