Wall Street has had a topsy-turvy week so far, and the volatility seems likely to increase on Wednesday as investors prepare for a final decision from the Federal Reserve on interest rate policy. Most investors expect at least a three-quarter percentage-point increase in the Federal Funds rate, which governs short-term borrowing and is a key benchmark that credit markets follow. Some fear that recent inflationary pressures could prompt the Fed to make an even larger increase. Yet after declines of around 1% Tuesday, stock index futures on the Dow Jones Industrial Average (^DJI 0.82%), S&P 500 (^GSPC 0.59%), and Nasdaq Composite (^IXIC 0.55%) had bounced back slightly shortly before trading began Wednesday.
A couple of companies saw their stocks rise following the release of good news on how their businesses are performing. General Mills (GIS 0.74%) and Coty (COTY 1.58%) have each had to deal with macroeconomic pressures affecting their customers' ability to make purchases, but both companies are finding ways to remain successful. Get the whole story below.
General Mills looks tasty
General Mills shares rose about 2.5% in premarket trading early Wednesday. The maker of cereal and other food products reported fiscal first-quarter results for the period ending Aug. 28 that made investors more optimistic about its ability to weather current industry conditions.
The numbers from General Mills remained strong even amid significant pressures. Net sales were higher by 4% to $4.7 billion, even though the company made substantial divestitures over the past 12 months. Organic sales were higher by 10%, as General Mills used its pricing power to offset some of its higher costs. Adjusted gross margin inched higher, and adjusted earnings of $1.11 per share were up 11% year over year.
General Mills has shaken up its segments to focus on what it sees as its best prospects for future growth. The sale of its European yogurt and some of its global dough businesses sent international revenue falling 30%, but the acquisition of the pet treat business of Tyson Foods boosted General Mills' pet category by nearly 20% from year-ago levels. For the most part, organic volumes were down, but pricing improved to bolster the company's top line.
General Mills also boosted its full-year fiscal 2023 outlook, now expecting organic sales to rise 6% to 7% and adjusted earnings to post a 2% to 5% rise in constant-currency terms. With investors also getting a dividend yield of nearly 3% on their investment, General Mills looks mouthwatering for many defensively minded investors seeking recession-proof stocks.
Coty looks to double a key business
Elsewhere, shares of beauty products company Coty were up close to 4% in premarket trading. In advance of an investor event in Monaco, the company released a comprehensive update on its strategic plans for one of its key segments, skincare.
Skincare is one of the six strategic growth pillars that Coty has identified, and CEO Sue Nabi has high hopes for the segment. In particular, Nabi is taking steps to double sales of Coty's signature skincare products by fiscal 2025 and sees them on track to reach $500 million to $600 million by then.
Coty has worked hard to emphasize its prestige line of luxury brands, which includes well-known names like Calvin Klein, Gucci, Lancaster, and Philosophy, and that has fit in well with more mainstream consumer brands like CoverGirl and Sally Hansen. Coty is focusing on mainland China and the Hainan province to start what it's calling its "skincare revolution."
With global skincare making up a $150 billion market, Coty has a ton of opportunities to boost its market share. Success in that segment could be a key driver for broader outperformance from the beauty company for years to come.