General Mills Seeks to Restore Volume-Driven Sales Growth After Mixed Q4

Against a “challenging consumer backdrop” and mixed Q4 earnings results, Cheerios and Betty Crocker maker General Mills said it will spend fiscal 2026 investing in greater value for shoppers feeling inflation woes. As a result, the conglomerate is projecting lower-than-expected annual profit.

“We expect the operating environment will remain volatile, with consumers pressured by widespread uncertainty from tariffs, global conflicts and changing regulations. We expect consumers to remain cautious and continue seeking value, prioritizing their spending on benefits that matter most to them like protein, bold flavors, and the comfort of familiar and fun brands,” said Jeff Harmening, CEO, in a prepared statement.

In the quarter ended May 25, net sales slid 3% year-over-year to $4.6 billion driven by lower pound volume and unfavorable net price realization and mix. Organic net sales were also down 3%, including a 2-point headwind from unfavorable trade expense timing.

Volume fell two percentage points as declines in the North America Retail and North America Foodservice segments offset gains in North America Pet Food and International.

On a segment-specific level, North America Retail sales plummeted double-digits to $2.6 billion, fueled by lower pound volume and unfavorable net price realization and mix. Still, the segment saw a “significant improvement” in competitiveness in the quarter.

According to Harmening, General Mills held or grew pound share across more than 60% of its top 10 U.S. priority businesses, including cereal, refrigerated dough, fruit snacks, hot snacks and soup – five categories in which the company had made investments in value, innovation and advertising. Additionally, the Lucky Charms and Trix maker stabilized household penetration across North America for the first time in three years.

The conglomerate’s Pillsbury brand was a particular bright spot in the second of fiscal 2025, delivering strong volume improvement. This was driven by stronger marketing efforts for the Pillsbury Doughboy and target value investments announced last quarter.

Harmening said General Mills will continue the playbook in fiscal 2026, addressing “key market gaps” and advertising behind its “Bakes Up Bigger” news on cinnamon rolls, crescents and biscuits.

On the cereal front, the company is gearing up for new brand campaigns for Cheerios, Cinnamon Toast Crunch and Lucky Charms and new product releases like a Cookies and Cream variety of Cheerios Protein.

“With Nature Valley Protein, Cheerios Protein and Ghost Protein, we now have a portfolio of protein cereals that generates more than $100 million in annual retail sales. We will ensure we have the right sizes and price points to deliver remarkable value for consumers,” said Harmening.

In the North America Foodservice segment, General Mills saw net sales slide 2% to $579 million, driven by declines in bakery flour and breads. Operating profit increased 5% to $83 million, thanks to HMM cost savings.

Notably, the Trix and Lucky Charms maker did not touch on its previously announced plans to remove certified colors from its U.S. cereals and all foods served in K-12 schools by next summer in its earnings report. The food conglomerate aims to remove certified colors from its U.S. retail portfolio by the end of 2027.

Looking ahead, General Mills projects fiscal 2026 organic net sales between down 1% and up 1%, adjusted diluted EPS down 10%-15% in constant currency from the base of $4.21 in fiscal 2025 and adjusted operating profit down 10%-15% in constant currency from the base of $3.4 billion the year prior.

The company is targeting $100 million in cost savings through its global transformation initiative and efficiency efforts, though those savings may be offset by investments in pricing and media spend.

“[We’re] backing up all of this investment with record levels of holistic margin management and also productivity initiatives. We’re not sitting still on that front. We know that it’s an investment year, but we’re confident these investments will pay off given what we’ve seen these past couple of quarters,” said Harming during a call with analysts and investors.