General Mills, Inc. Weak Quarter Could Be A Sign Of Future Disappointment For Discount Retailers

General Mills, Inc. (NYSE: GIS) reported weaker-than-expected earnings on Wednesday, missing analysts EPS estimates by 11.6 percent and missing revenue estimates by 2.5 percent.

Brian Sozzi suggests that General Mills’ downbeat earnings may be a sign of unpleasant things to come for discount retailers such as Wal-Mart Stores, Inc. (NYSE: WMT) and Target Corporation (NYSE: TGT). General Mills’ disappointing earnings report provides evidence of dull consumer spending on grocery items essential to Wal-Mart and Target revenues.

Campbell Soup Company (NYSE: CPB) also reported downbeat earnings, missing Street revenue estimates by $20 million, further questioning the strength of consumer spending.

Campbell Soup's CEO stated, "the industry is now in a period of profound change and challenge, and there has been a meaningful decline in the performance of the packaged food sector.”

Given that Wal-Mart receives 56 percent of its annual sales from its grocery business mainly consisting of packaged and processed foods, discount retailers may be susceptible to report a disappointing quarter.

Wal-Mart is set to announce fiscal second quarter earnings on November 20. Target plans to announce fiscal third quarter earnings on November 19.