General Mills' earnings miss appeared to spook investors, prompting a selloff that dragged down multiple food stocks to more than 1-year lows.

General Mills reported earnings of 71 cents per share, 5 cents below consensus estimates. Revenue totaled $3.77 billion, short of the $3.79 billion Wall Street had expected and a 3.5 percent decrease from the year-ago quarter.

It was further evidence that packaged food companies are struggling to keep up with changing consumer preferences. Shoppers are increasingly hugging the perimeter of grocery stores and shunning the center, where packaged food typically lines the shelves.

North American retail sales fell 5 percent from the same time last year, driven by a double-digit decline in yogurt sales and a 7 percent decline in cereal, General Mills said.

Cereal is seeing some of the worst sales trends in grocery stores, Piper Jaffray analyst Michael Lavery said. That could put cereal at risk of losing shelf space as stores shrink center aisle space to make room for fresh food, he said.

Lavery pointed to Kroger as an example. On an earnings call earlier this month, CEO Rodney McMullen said the grocer is undertaking efforts to optimize retail space, including adding more room for fresh food. Additionally, he said, products and categories must earn their shelf space.

"One of the challenges [General Mills has] is they are not only facing share losses and sales declines, but also shrinking shelf space," Lavery said. "It's all related. The more sales down, the more a retailer is likely to trim shelf space back, which then makes it hard to return to the sales level they once had."

"Against that backdrop, I think how you think about the moves today may not simply relate directly to quarter [earnings] news," Lavery said. "Kellogg is off a little further as well. There are potentially still some lingering category concerns."

While General Mills maintained its estimate of fiscal year earnings per share growing 1 to 2 percent, it now expects to receive a 1-cent benefit from foreign exchange. The company anticipated profit was going be down in the first half of the year then turn positive in the second half, Chief Financial Officer Don Mulligan said on a call with analysts and investors.



General Mills' shares slid nearly 6 percent on Wednesday. They have fallen more than 15 percent this year.

General Mills' stock performance this year:

Source: FactSet

Shares of General Mills, Campbell Soup and Kellogg all hit their lowest prices since August of 2015. Kraft Heinz's stock hit its lowest point since May 2016. Molson Coors shares reached their lowest price since February 2016.

Packaged food and meat companies in the S&P 500 fell 1.7 percent Wednesday. They have fallen about nearly 8 percent this year.

Packaged food and meat companies in the S&P 500's stock performance this year:

Source: FactSet