General Mills posted a smaller decline in quarterly sales than Reuters had expected

(Reuters) – General Mills (NYSE: ) posted a smaller-than-expected drop in quarterly sales on Wednesday, benefiting from improved demand as the maker of Cheerios cut prices for some of its products.

General Mills and other packaged-food peers have struggled with low volumes in the past few years as price-conscious customers fail to see companies raise prices to offset higher input costs.

Because of this, General Mills has been trying to roll back prices for the past two weeks to increase prices. Volumes were flat in the reported quarter, compared to a 2 percent decline in the previous quarter.

Prices fell 1 percent in the first quarter, compared with a 6 percent increase last year.

Consumers choosing home-cooked meals to take advantage of the savings contributed to a 1 percent increase in pound volume in the US department stores in the quarter, said CEO Jeff Harmening.

The company expects volume trends to improve gradually in fiscal 2025, although full-year dollar growth is expected to be below long-term growth projections.

However, General Mills' gross margin fell 130 basis points to 34.8% in part due to higher input costs and double-digit media investments.

Last week, General Mills said it would sell its North American yogurt business to French dairy companies Groupe Lactalis and Sodiaal in a $2.1-billion deal to focus on core brands in an effort to attract value-seeking consumers.

Its sales for the quarter fell 1% to $4.85 billion from a year ago. Analysts, on average, expected a drop of 2.11% to $4.80 billion, according to LSEG data.

The company reported earnings per share of $1.07 on an adjusted basis, trimming previous estimates by 1 cent.

The company's shares were up about 1% in early trading.