Blue Buffalo sales at US$343 million so far in FY19

Jeff Siemon, vice president of investor relations, discussed Blue Buffalo dog and cat foods sales performance and the company’s strategy for the premium pet food brand.

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(vitalytitov | BigStock.com)
(vitalytitov | BigStock.com)

General Mills’ pet segment net sales, including Blue Buffalo, totaled US$343 million in the first-quarter of fiscal year 2019. General Mills released the quarterly results for Blue Buffalo on September 18. Seeking Alpha posted a transcript of General Mills’ conference call.

In that conference call, Jeff Siemon, vice president of investor relations, discussed Blue Buffalo dog and cat foods sales performance and the company’s strategy for the premium pet food brand. General Mills acquired Blue Buffalo for approximately US$8 billion following the United States Federal Trade Commission’s approval of the deal on March 20.

“Our transition philosophy has been clear from day one, bring General Mills capabilities to bear where they can add value and stay out of the way where they’re not needed,” Siemon said during the conference call. “We’re seeing early wins across key areas including supply chain, sales, innovation and strategic revenue management.”

Siemon said Blue Buffalo has an opportunity to drive improved performance in pet specialty by improving in-store execution, continuing to support the brand’s Pet Detective program and strongly promoting exclusive pet products to be launched in the specialty channel this year.

“Billy Bishop and his team have recently held top-to-top meetings with the new CEOs at our largest customers in the channel and have reinforced our commitment to their business,” he said.

Blue Buffalo also plans to drive robust growth in e-commerce, Siemon said. General Mills is partnering with e-commerce pet retailers to drive visibility for Blue on the digital shelf.

General Mills’ Blue Buffalo pet food sales in Q1 FY19

General Mill’s pet segment net sales increased an estimated 14 percent, with positive contributions from volume growth and positive net price realization and mix, according to a press release from the General Mills. Continued expansion in food, drug and mass channels and e-commerce growth drove net sales up. However, declines in pet specialty sales offset some of those mass-market gains.

“Net sales for Blue Buffalo were up 40-percent on a pro forma basis in Q1, including a stub period at the end of April after we closed the acquisition,” Siemon said. “Excluding those additional days, pro forma net sales were up mid-single digits.”

Net sales results benefited from the inclusion of 7 days of net sales from the month of acquisition. Segment operating profit of US$14 million was US$62 million below the prior year on a pro forma basis, driven by purchase accounting charges including a US$53 million one-time inventory adjustment and US$3 million of intangible amortization, as well as significant input cost inflation and start-up costs related to two new production facilities.

“As we look ahead to the rest of fiscal 2019, we have plans to accelerate our growth in pet, while maintaining our channel-specific approach,” he said. “We’ll continue to execute our food, drug and mass expansion in a thoughtful way, ensuring we’re learning from each new customer launch. We’re also focused on improving our trends in pet specialty.”

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