General Mills Cautions About Inflation, Bets On Strong 2026
General Mills, Inc. (NYSE:GIS) stock rose Wednesday after the packaged food maker topped Wall Street's earnings and revenue expectations for the second quarter, signaling resilient demand and effective brand investments despite ongoing margin pressure and a year-over-year sales decline.
Management pointed to strong execution, brand investments, and steady demand across key segments as drivers of the performance.
The company reported second-quarter adjusted earnings per share of $1.10, beating the analyst consensus estimate of $1.03.
Quarterly sales of $4.86 billion (down 7% year over year) outpaced the Street view of $4.781 billion.
Organic net sales were down 1%, driven by unfavorable organic net price realization and mix.
“Our team continued to execute exceptionally well in a volatile operating environment, delivering results ahead of our expectations in the second quarter,” said General Mills Chairman and Chief Executive Officer Jeff Harmening.
Segment Performance
Second-quarter net sales for General Mills’ North America Retail segment were down 13% to $2.9 billion.
Sales for the North America Pet segment were up 11% to $660 million.
For the North America Foodservice segment, sales were down 8% to $582 million.
Second-quarter net sales for the International segment increased 6% to $729 million. Organic net sales were up 4%, driven by growth in Brazil, China, India, and North Asia.
Metrics
Second-quarter constant-currency net sales fell 1% at Cereal Partners Worldwide and were flat year over year at Häagen-Dazs Japan.
Joint ventures posted a $60 million after-tax loss, swinging from a $30 million profit last year due to an $85 million non-cash goodwill impairment tied to CPW Australia.
General Mills said second-quarter and first-half results reflected heavy investment in boosting brand visibility.
The period also absorbed impacts from the North American yogurt divestitures and unfavorable trade expense timing.
The CEO added that the company’s brand investments are delivering results, supporting organic volume growth in North America Retail and strengthening competitiveness across segments, prompting management to reaffirm its full-year fiscal 2026 outlook amid improving momentum.
Adjusted gross margin was down 150 basis points to 34.8% of net sales, driven by higher input costs.
Adjusted operating profit of $848 million was down 20% in constant currency, driven by lower adjusted gross profit dollars.
The company exited the quarter with cash and equivalents worth $683.4 million, lower than $2.292 billion a year ago.
Outlook
The company expects organic net sales to range from a 1% decline to 1% growth.
Adjusted operating profit and adjusted diluted EPS are projected to fall 10% to 15% in constant currency (outlook reiterated).
In fiscal 2026, General Mills is investing across its brands to reignite volume-led organic sales growth through product innovation, packaging, marketing, omnichannel execution, and consumer value initiatives.
The company expects these efforts to lift sales from new products by 25% in fiscal 2026.
General Mills said early remarkability investments are lifting pound volume and market share, with dollar growth expected after the initial pricing phase as price and mix improve.
Management said these investments, along with yogurt divestitures and normalized incentive expenses, will pressure fiscal 2026 profit and EPS but support stronger long-term growth.
General Mills expects higher growth spending, rising input cost inflation (including tariffs), and normalized incentive expenses to outweigh cost savings and efficiency gains, putting pressure on margins in fiscal 2026 despite an extra 53rd week of sales.
GIS Price Action: General Mills shares were up 1.04% at $47.51 during premarket trading on Tuesday, according to Benzinga Pro data.
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