General Mills cuts annual sales, profit forecasts as weak consumer spending hits demand

Feb 17 (Reuters) - General Mills GIS.N on Tuesday cut its annual core net sales and profit forecasts as the Cheerios cereal maker grapples with slow demand in a weakening consumer environment.

The company, which left its annual outlook unchanged in December, has faced muted demand as Americans curb discretionary spending and shift to cheaper pantry staples.

Earlier this month, PepsiCo PEP.O cut prices on core brands such as Lay's and Doritos by up to 15% following a consumer backlash against earlier price hikes.

"Weak consumer sentiment, heightened uncertainty, and significant volatility have weighed on category growth and impacted consumer purchase patterns, resulting in a slower pace and higher cost of volume recovery than initially expected," General Mills said in a statement ahead of its presentation at the Consumer Analyst Group of New York (CAGNY) conference on Tuesday.

The company expects annual sales to be down 1.5% to 2%, compared with its previous range of down 1% to an increase of 1%.

General Mills also sees its annual adjusted operating profit and adjusted earnings per share down 16% to 20% in constant currency, compared with its previous range of down 10% to 15% in constant currency.

The shifting consumer landscape, driven in part by the growing preference for healthier options and increased adoption of GLP-1 weight-loss drugs, poses additional risks to packaged food demand. Peer Conagra CAG.N, maker of Slim Jim meat snacks, maintained its annual sales and profit targets despite a muted second quarter.

Shares of General Mills were down 3% in premarket trading.