On Friday, General Mills (GIS) said that weakness in volumes across US retail food categories in December and January will negatively impact its fiscal third-quarter results (ending in February). As we outlined in our note on the firm’s fiscal second quarter, we were less-than-impressed with the company’s performance at the time, and we suspect most of the current weakness is coming from continued reduced demand for flour, dessert mixes, canned and frozen vegetables, and yogurt. Specifically, General Mills lowered its fiscal 2012 adjusted diluted earnings per share guidance to the range of $2.53 to $2.55 (was $2.59 to $2.61 previously). We also expect the firm’s fiscal 2012 results to be negatively impacted by higher input costs and a negative mix shift due to the firm’s recent Yoplait acquisition. Though we plan to revisit our valuation model on General Mills, we don’t expect to make a substantial change to our estimate of its fair value ($38 per share). We continue to remain on the sidelines with respect to the firm’s shares.
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