General Mills, Inc. (NYSE:GIS) recently reported its first quarter earnings and discussed the following topics in its earnings conference call.
Retail Sales Growth
Matthew Grainger – Morgan Stanley: Just to dove into the U.S. Retail sales growth a bit more. I think it’s clear that you made some progress during the first quarter and we did see some sequential improvement. But the 4% growth does seem like it benefited from a few factors like new product shipments and mix. So, as we’re thinking about modeling out that segment over the coming quarters and just how the operating environment is evolving. Just wanted to get your thoughts on whether there was an inventory benefit here in the first quarter that we should take into account and expect to normalize over the next quarter or two? And how should we think about the balance between price mix and volume across the coming quarters, should we expect to see – I assume this type of mixed benefit persisting beyond the first quarter?
Kendall J. Powell – Chairman and CEO: This is Ken. Thank you for the question, and you partly answered it. It is in fact, we did ship lots of new products over the course of the quarter, and as all of you know, it takes a while for those to move through the channel and start to get counted at retail. So, that’s part of the gap that you mentioned. You talked about mix. You also mentioned inventory and I do want to remind all of you that, first quarter a year ago our merchandising pressure was quite a bit below average and our inventories as a result our retail inventories were low. So, as we have normalized merchandising we have seen the inventories normalized behind that. So, you kind of identified some factors in the first quarter. You also, as you note, were quite pleased generally with the overall effort in the first quarter. We like the new products, we are seeing some good trends across some important categories and we are encouraged by that. Going forward, I think, we are looking for growth in low single-digits and it’s always a little bit of all three, it’s a little bit of volume, maybe a bit of price and a bit of mix. We do expect that, Matthew, to normalize here versus some of the year-over-year comps. In Q1, we expect to see that normalize as we go forward. Don, I don’t know if you would want to add anything to that?
Donal L. Mulligan – EVP and CFO: I think you captured well, as low-single-digits is still our guidance for U.S. cereal sales and there is going to be a bit of volume. Some mix, we saw that in the first quarter with cereal grain, our natural organic products drive net sales growth and they have a positive mix benefit for us and we expect (indiscernible) as the year unfolds…
Matthew Grainger – Morgan Stanley: Then just with respect to quantifying to the extent we can, the impact of those headwinds – or those dynamics, sorry not headwinds in the second quarter, with the inventory benefit that you may have seen here in the first quarter. Would you expect second quarter sales to be generally in line with your full year targets or sort of towards the lower end of that range?
Donal L. Mulligan – EVP and CFO: Well, Matt, we’re not going to give quarterly guidance, we’ll just reaffirm that we expect low single-digit sales growth with the mix of all those items to play out for the balance of the year.
Bryan Spillane – Bank of America Merrill Lynch: Question on the U.S. cereal business. I guess two things. Relative to the – I guess, the debate that’s going on in the market about the health of the category, and I guess some of the current concerns that we hear about, can you talk a little bit about the effectiveness or the efficacy of merchandising, and especially investing in price to drive lift? And I think there is some concern that maybe we start to – as volumes – category volumes that have been so soft the last few years that we get into the temptation to begin to try to invest in price in order to drive some lift. So, just your thoughts on where consumers are in terms of price if that’s going to be a motivating factor? And then second, just in terms of maybe demographic cohort, if you could just talk a little bit about how you think your brands are doing and maybe the category is with kids, with families, with low-income consumers; just trying to get a sense of whether there is maybe a demographic cohort in the market that may need to be addressed more definitively than maybe others?
James H. Murphy – SVP and President, Big G Cereals: This is Jim. So, commenting on the merchandising, I said it in my prepared remarks, but product news and innovation and investment on the consumer side, is what’s going to drive this category. The temptation to increase merchandising in order to do that is not an effective and not an efficient way to grow the category long-term. And so, we believe that the product news innovation and investment from the branded players needs to increase in order to make this category grow healthily in the future. To your second question on demographics, we see that the families – the mainstream families who are after taste and branded value and fun in the breakfast occasion are strongest consumers right now and it manifest itself to the strength of our all family brands. I mentioned it in my remarks, things like Lucky Charms and Honey Nut Cheerios that appeal to everybody in the family are very, very strong right now. So, we don’t see a weak spot really across demographics, in fact Hispanics, as I said, consume more cereal than anybody and that’s a growth driver for us in the future. So demographically, cereal has got a lot of tailwinds actually going forward.
Bryan Spillane – Bank of America Merrill Lynch: Just following up on that, just aging boomers is there anything difference – any difference in terms of the category dynamic with maybe people 50 plus?
James H. Murphy – SVP and President, Big G Cereals: That’s a way over index as well. So the two groups of consumers that over index are the families with young kids and the 55 plus crowd, and so as we look at that that is a demographic tailwind as I mentioned for the cereal category going forward.
Bryan Spillane – Bank of America Merrill Lynch: From your perspective there is no change there?
James H. Murphy – SVP and President, Big G Cereals: No.