General Mills Slashes FY 2025 Profit Forecast as It Doubles Down on Promotions

Despite posting better-than-expected Q2 results, Cheerios and Betty Crocker maker General Mills announced yesterday that it has lowered its profit outlook for fiscal 2025 as it implements short-term promotions to attract budget-conscious consumers.

During an earnings call with shareholders, CEO Jeff Harmening said the company’s discounts are in targeted areas – like fruit snacks and refrigerated baked goods – rather than “everywhere” in its portfolio.

“To achieve and build on our broad-based improvements in volume and share, we’ve stepped up our investment to bring greater value to consumers,” said Harmening in a prepared statement. “Amidst a dynamic and uncertain macroeconomic backdrop for consumers, we believe this is the right choice to further strengthen the remarkability of our offerings, which will better position General Mills for sustainable growth in fiscal ‘26 and beyond.”

In the quarter ended Nov. 24, net sales climbed 2% year-over-year to $5.2 billion, fueled by “favorable timing items” like an increase in North America retailer inventory and favorable trade and other expense timing. However, General Mills anticipates these items reversing in the back half of 2025.

All four of the Minneapolis, Minn.-based company’s divisions – North America Retail, North America Pet, North America Foodservice, and International – improved pound and dollar share trends in the second quarter. Dollar share has improved at a slower pace, said Harmening, given the company’s recent investments to increase value for consumers.

On a segment-specific level, North America Retail net sales were relatively flat at $3.3 billion, driven by favorable net price realization offset by lowe pound volume.

In the second quarter, General Mills returned its U.S. cereal business to dollar share growth, thanks in part to merchandising and advertising executions, including campaigns with the Kelce brothers and Chex Holiday Season. But the gains were weighed down by a step back on refrigerated dough, which had a “disappointing start to the key baking season,” said Harmening.

In response, the company plans to strengthen its marketing efforts for the Pillsbury Doughboy and execute targeted value investments. General Mills also added investment to narrow price gaps across a broader range of items this month and plans to ramp up its “taste renovation” in the second half of the year.

“Stepping back, we’ve driven tremendous growth on Pillsbury refrigerated dough over the past five years. Getting this business back on track will be key to improving our North America Retail growth prospects,” said Harmening.

In the North America Foodservice segment, General Mills delivered strong market share growth, with more than 70% of its priority businesses growing or holding share in Q2. In non-commercial channels, the company has continued to build on its leading position in cereal in K-12 schools by leveraging its new 2 Equivalent Grain packaging and reduced-sugar offerings.

Looking ahead, General Mills now expects adjusted operating profit between down 4% and 2% in constant currency, versus the previous range between down 2% and flat. Adjusted diluted EPS is now projected to range between down 3% and down 1% compared to the previous range between down 1% and up 1%.

During a Q&A session yesterday, one shareholder questioned how the company will address the current regulatory environment and any potential impacts it may have on the business.

Although he said it’s still too early to discuss what will happen broadly, Harmening expressed full confidence in General Mills’ ability to pivot. The company’s R&D team is “very agile,” and it has “been navigating regulatory environments for nearly 160 years,” he said.

Addressing California’s new legislation about certified colors and food set to go into effect in 2027, executives said 85% of General Mills’ portfolio is already compliant and the rest of it will be compliant by 2027.

“As we think about the regulatory environment, we take food safety very seriously, and we’re going to follow all of the regulations, but I’m wildly confident in our ability to pivot because we have been able to do that historically,” said Harmening.