General Mills Inc.'s largest business unit will undergo a leadership change as it copes with anemic U.S. consumer demand and an industrywide sales malaise.
The Golden Valley-based packaged food giant said Friday that Ian Friendly, who's been head of General Mills' U.S. retail division since 2006, will retire on June 30. Friendly, 53, is a 30-year veteran of the company.
Jeffrey Harmening, the 46-year-old head of General Mills' international cereal operations, will succeed Friendly effective May 1, according to a filing with federal securities regulators. A transition period will begin March 1.
General Mills' U.S. retail division accounted for $10.6 billion, or 60 percent, of the company's sales in its most recent fiscal year. The division includes cereal, Yoplait yogurt, Green Giant vegetables, Nature Valley snack bars, Betty Crocker baking products and Progresso soup.
The division's sales rose 1 percent during the first half of General Mills' current fiscal year, mirroring last year's growth pace. The entire U.S. packaged food industry has suffered from weak sales trends, as consumer spending on food hasn't picked up much — even as the economy improved.
"Consumers might simply still suffer from falling income," Thilo Wrede, a Jefferies stock analyst wrote in a research report this week.
According to Morgan Stanley analyst Matthew Grainger, General Mills is being hit harder than some of its peers. "Within the U.S., [General Mills'] sales have meaningfully trailed the broader U.S. food industry in recent years," Grainger wrote in a research report this week.
Part of the problem is the overall U.S. cereal business, which has seen sluggish sales over the past few years. The other prime issue: a big sales decline for Mills' U.S. Yoplait division, the result of its late entry into the mushrooming Greek yogurt business.
Still, the company's U.S. snacks division, home to Nature Valley, has been growing at an enviable rate.
Harmening, who's been with General Mills since 1994, took a similar route to the top of the U.S. retail unit as Friendly. Since July 2012, Harmening has been CEO of Cereal Partners Worldwide, General Mills' joint venture with Nestlé outside of North America. It does nearly $2 billion in annual sales.
From 2007 to 2012, Harmening was president of General Mills' Big G cereal division, the largest business in its U.S. retail portfolio. Friendly was president of Big G from 2002 to 2004 before going on to lead Cereal Partners Worldwide and eventually becoming head of U.S. retail.