General Mills reported adjusted earnings of 75 cents a share on net sales of $4.39B for its fiscal first quarter ended Aug. 30, topping Wall Street estimates. Shares still dropped on Wednesday, extending a 24% decline this year.
Sales fell 3%, which the company blamed mainly on the divestiture of its US yogurt business. Organic sales were essentially flat. Adjusted profit fell 13% from a year ago. Reported profit came in at $397M, down from $1.2B.
The turnaround is moving, slowly
General Mills spent much of fiscal 2026 cutting prices to win back budget-conscious shoppers. General Mills COO Dana McNabb said the company is shifting its focus to developing new products now that the investment is complete.
The company is pushing higher-protein Cheerios, new snack and frozen items, and premium pet food brands like Tiki Cat. It has also brought in new agency partners and doubled its use of influencers.
Cost cuts are the other lever. General Mills remains on track for at least $750M in savings this year and $3B by 2030.
Margins are still under pressure
Adjusted gross margin contracted 90 basis points to 33.3% of net sales, hurt by higher input costs. Management expects similar pressure through most of the fiscal year.
Tariffs on metals like aluminum and steel used in packaging have pushed raw-material costs higher across packaged food.
North America Retail, which generates more than half of total revenue, saw sales fall 7% to $2.45B, including a 4-point hit from the yogurt sale. That compares with a 13% drop a year ago.
North America Pet was roughly flat at $612.8M, with cat food up double digits and dog food down high single digits. Foodservice sales rose 1% to $523.1M.
International was the bright spot, with sales up 4% to $794.3M on growth in India, China, and distributor markets.
Management reaffirmed fiscal 2027 guidance for organic sales of down 1.5% to up 0.5% and adjusted earnings of $3 to $3.20 a share, down from $3.55 in fiscal 2026.
"General Mills is showing signs of turning a corner, but it is not there yet."
Lale Akoner, eToro
The company paid $330.5M in dividends during the quarter and repurchased no shares. Investors wanted proof the sales slump has ended, and one flat quarter did not deliver it.
