GIS
#Okay, thank you.
Hey, <UNK>.
Good morning.
Thank you.
Yes, it's about $0.05.
I think it is ---+ what we had $0.04 in July, it's $0.09 now, so about a $0.05 swing.
And as obviously, the US dollar strengthened, the Canadian dollars, it's the [A] dollars, it's the Euro, it's the Brazilian real.
So yes, we see more of a headwind in our reported results from currency.
Yes, good question.
That is a FY16 estimate.
So it will be a partial year depending on when the deal closes, hence the reason why we gave you a range.
As we've talked about, <UNK>, as you and I talked about, talked with other investors ---+ as we talk about our portfolio, the reason we're often asked why, why don't we do ---+ why aren't we more active from a divestiture standpoint.
And one of the things we always come back to is, we have very profitable cash generative brands.
And so, Green Giant has a little under $600 million in sales last fiscal.
Its margins were in the upper teens, and so that's going to be lost income this year.
We're obviously going to use the proceeds to ---+ as we said, half of it is going to used to reduce debt, half is going to be used to buyback shares, so that will have a somewhat mitigating impact on the results.
But at the end of the day, it's a profitable business, and hence the reason we got a pretty fair price from B&G.
Yes, a small, certainly a certain amount of direct overhead that will go, and there's some stranded overhead that will go as well during the course of this year.
That's in those numbers as well.
We're already seeing it, <UNK>, and I'll let Shawn jump in here.
So I'll take them separately.
So in the baking area, where we've really shifted our attention to getting the price point at the shelf right, that's already been executed, and we're already seeing stabilization of that business.
On the [dry dinners] front where it's ---+ the value is being delivered by increased product in the box, that takes longer to actually execute and get the flow through on the shelf.
And so, that will probably take us, I would say another 60 days to get it fully on shelf, and get a good clean read.
Okay.
Thanks, <UNK>.
Good morning, <UNK>.
Those are the key drivers.
I'd say another one is with ---+ we're seeing growth in US retail.
That obviously has a beneficial mix impact to, a slight favorable mix impact.
But you hit the big three.
And let me just address that, and I think what is probably a question about our balance of the year as well, because you do hit on what is going to change as the year unfolds.
So we had a benefit, as you recall a year ago, we had higher merchandising expense in the first quarter.
We spent much of last year working that down, and we started seeing benefit of that in the back half of the year, we started seeing gross margin expansion starting in Q4.
We also have the benefit of our cost savings.
That is still primarily hitting our administrative expenses, but we're starting to see some benefit in our gross margin as well.
And then inflation, inflation in the first quarter was less than 1%.
We still expect it to be 2% for the full year.
So obviously, we'll be above 2% for the next three quarters, and that had a beneficial impact ---+ a disproportional beneficial impact in Q1.
And those three items were all relatively equal in terms of their impact in the quarter, and as the year unfolds.
And so, we certainly had planned for very strong Q1 as <UNK> mentioned in his remarks, in the earnings release, and we're pleased to see it come through.
Hi, <UNK>.
Yes, thanks for the questions, <UNK>.
Both of them are really good.
On the e-commerce front, in the US, food sales that are going through online are between 1% and 2%.
Now that's changing pretty quickly, meaning moving from 1% to 2%.
If you said, what does it look like out four or five years ahead, all the projections I've seen are in the 5% to 6% range.
So it's going to be a high growth area.
Obviously, Amazon is leading some of the thought there.
Walmart.com is investing a great deal to make sure that they ---+ and utilizing their stores to make sure they're competitive.
And that really is causing all of the players in the marketplace to want to be active in the e-commerce space, so an important place for us to play we believe.
As I mentioned with our portfolio, whether it's small hard to find items or our top turning items, we believe that we're well positioned to capture that growth.
As far as the long tail, and our look at our overall distribution of SKUs, there have been several efforts over the years, by I would say all the manufacturers to go through a SKU rationalization.
And in general, SKU rationalization if you just cutoff the tail because a lot of those items are either highly profitable or are covering a lot of overhead, that doesn't really work.
So the job first is to get better distribution on the high turning SKUs, and replace, get those slower turning SKUs off the shelf, so that when you do discontinue them, the impact of those is very small at that point.
So our first job is to really move our distribution up to our fastest turning items, and then consider what things we can discontinue.
And the only thing I, the only comment I would add to that, <UNK>, is that it's very easy to see e-commerce sales grow very rapidly.
We have only to look at other markets where we do business, like the UK and France where some of our categories, our online sales are approaching 10%.
So it's pretty clear that we're going to move in that direction very rapidly in the US.
And this is an area that we're investing in at General Mills to develop our capability, and make sure that we can be leaders and great partners for all of our customers who have a lot of interest in this.
Just to put one finer point on what <UNK> just said.
The piece that will really shift the US landscape on e-commerce is when it moves from being single item search to being full basket online search, which it has in the places <UNK> mentioned in Europe and other parts of the world.
And you can see that coming.
And so that's why we expect the growth projections to materialize.
Hey, <UNK>.
It won't be that same level, but it will be something incremental to that.
In the next year, we'd have a full impact of the share reduction and the debt reduction, so it will be south of the $0.05 to $0.07.
But it will be incremental, since this year is only a partial year.
Yes, this year we were up ]290] basis points.
Last year in the comparable quarter, we were down, I believe it was 200 basis points.
So to think about a full year increase in the 50 to100 basis points is a pretty fair range to be in.
Hi, <UNK>.
We were pleased with the sales growth.
The cost pieces that came in, were pretty much right in line with our expectations, because again they were pretty foreseeable, in terms of the merchandise timing, and cost savings, the inflation.
What I would say is, we were very pleased with US retail sales.
Volume came in probably 1 point ahead of our expectations.
And from a Company standpoint, stripping out Annie's and ForEx and all that, we had organic volume growth of 1% and price mix of 1%.
So a total sales of ---+ organic sales growth of 2%, and we haven't seen a quarter like that in a couple years.
So we felt good about the start.
And what I would say is, we'll continue to monitor that, and we'll handle the proceeds of that similar to what we've done with our plan and our cost savings, which is if we see some plus, there's going to be some we invest back, and some that we flow, and we will keep you apprised of what we see.
I think that is a fair recap.
We are ---+ we feel good about the quarter, it did come in a little ahead of our expectations on the top line, obviously to flow through to ---+ a little bit better on the bottom line.
But it's only one quarter.
And as <UNK> and Shawn talked about, most of our initiatives are still in front of us, which we feel good about, but we want to see play out before we revise our expectations for the full year.
Well, that's an excellent question, and <UNK> will be very happy to ---+ (laughter).
Well, first of all, I'll tackle the question on the earnings.
I mean, again, we were 20% down.
Strip out ForEx, it was 3%.
And that has a number of factors anything from transaction FX to launch costs for Yoplait in China, so some timing items as well.
We still fully expect, not only mid single-digit sales growth, constant currency basis international, but margin expansion on top of that.
So we still feel good about how the year will play out.
In terms of your question on pricing, pricing comes into play locally when there's local inflation that is offsetting it.
If there's not necessarily economic factors that are driving it, it's a little bit tougher to get pricing in the marketplace.
But we take pricing where we believe that we have the opportunity to do it, and you've seen that come through probably most fully in our Latin American markets over time, where you do see local inflation.
We can follow-up with you.
My recollection is that it's been it was pretty stable.
It was better in Q4 and it was we were kind of down 1% here in Q1, but I mean, its basically been stable.
And so, I would say that it didn't worsen.
Of course, we'd like ---+ we need to see it improve.
Well, I'll hit the Annie's question, <UNK>.
Annie's was a 3 point benefit to our net sales, our USRO net sales and 2 points of that was volume and 1 point was price mix.
You saw it on the slide, the Company was 1 point each.
I don't ---+ do we know the answer to the second question.
Our inventories.
We believe that our inventory levels are actually in line as we go into Q2 this year.
That was not as much the case last year when we were in this position.
So I would expect, as <UNK> indicated earlier, that our movement and our RNS should kind of track well from here on out.
All right.
Well, we know our friends at ConAgra are on the phone, so I think we should wrap up here.
Okay.
Thanks, everyone.
