General Mills (NYSE:GIS) executives told investors the company is beginning to see competitive benefits from a fiscal 2026 strategy built around stepping up investment in “remarkability,” even as those actions continued to weigh on third-quarter sales and earnings. In prepared remarks for the company’s fiscal 2026 third-quarter earnings update, Chairman and CEO Jeff Harmening said the company is seeing “clear signs of progress” in leading indicators such as household penetration, baseline sales, distribution, and market share, which management views as foundational to a return to growth after a reinvestment-heavy period.
Harmening said the company entered fiscal 2026 expecting reinvestment, divestitures, and timing headwinds to pressure sales and earnings through the first three quarters, but to improve competitiveness and set up a return to growth afterward. Management reaffirmed fiscal 2026 guidance and said it expects a “significant sequential improvement” in fourth-quarter results aided by favorable timing comparisons, a 53rd week, and what it described as continuing market share momentum.
Third-quarter results: sales down, profit pressured by reinvestment and timing
On profitability, Bruce said adjusted operating profit was $547 million, down 32% in constant currency, driven by higher input costs and lower volume, partially offset by favorable product mix. Adjusted diluted EPS was $0.64, down 37% in constant currency, driven primarily by lower adjusted operating profit and a higher adjusted effective tax rate, partially offset by fewer shares outstanding.
Harmening said adjusted operating profit and adjusted EPS were each down by more than 30% in the quarter, and that nearly two-thirds of the decline reflected factors the company anticipated entering the year—reinvestment, divestitures, and unfavorable trade expense timing comparisons. He added that the remaining pressure came from retailer inventory changes and weather-related supply chain disruptions that emerged in the third quarter and are expected to “largely reverse” in the fourth quarter.
Weather disruptions and inventory swings weighed on shipments
Bruce said winter storms drove meaningful volatility in January and February, affecting both consumer purchases and customer shipments. He cited a “four-fold increase” in volatility of weekly U.S. Nielsen consumer volume during that period, including one week down almost 14% year-over-year and another up 21%. The company said the volatility contributed to short-term changes in customer order patterns that reduced retailer inventory during the quarter.
Storm disruptions also affected the supply chain, lowering service levels and raising costs. Bruce said plants were back online as the company entered the fourth quarter and that the disruption-related headwinds seen in the third quarter are expected to “flip to a tailwind” in the fourth quarter.
North America Retail: price adjustments, innovation, and improving fundamentals
In North America Retail, third-quarter organic net sales fell 4%, driven by lower volume and unfavorable price/mix, Bruce said. Segment operating profit declined 33% in constant currency, reflecting lower volume (including the impact of the North American Yogurt divestitures) and higher input costs, partially offset by favorable product mix and lower SG&A expenses.
Harmening emphasized actions taken to improve competitiveness, including base price adjustments across roughly two-thirds of the North America Retail portfolio to get below “key price cliffs” and keep price gaps to competitors in a “sustainable range.” He said the company is seeing progress in baseline volume trends and household penetration, and he pointed to innovation and renovation efforts such as Cheerios protein cereal, Progresso Pitmaster Soup, and Mott’s filled bars. Management said North America Retail is on track to deliver roughly a 25% increase in net sales from new products in fiscal 2026.
Harmening also highlighted packaging and format initiatives, including “Price Pack Architecture” options ranging from entry price points to smaller sizes and premium trade-up formats. He cited Chex Mix tubs as more than 60% incremental to the company’s salty snacks business.
According to Harmening, the company’s investments have supported improvement in key measures:
- Base volume improvement of six points in the top 10 categories and five points overall versus fiscal 2025 trends, which management described as an encouraging indicator for future profitable growth.
- North America Retail grew or held total pound share in more than 70% of priority businesses in Q3 and in eight of the top 10 categories so far in the fiscal year.
- Household penetration increased in seven of the top 10 North America Retail categories through Q3.
Bruce said organic volume growth trailed Nielsen-measured retail volumes by about one point, attributing it partly to demand volatility. He said about half of the gap was a normalization of second-quarter favorability, and the other half is expected to reverse into a fourth-quarter tailwind.
North America Pet: Love Made Fresh launch and continued cat feeding strength
In North America Pet, Bruce said third-quarter reported net sales rose 3% (including the Whitebridge acquisition), with double-digit growth in cat feeding, mid-single-digit growth in pet treating, and a mid-single-digit decline in dog feeding. Organic net sales declined 3%, trailing retail sales by roughly five points due largely to retailer inventory changes, while all-channel retail sales grew more than 2%. Segment operating profit was essentially flat year over year in constant currency.
Harmening said the company grew household penetration and improved dollar share trends, while continuing to fuel growth in cat feeding and building a “new growth pillar” with Love Made Fresh. He said Love Made Fresh had been in market for about five months, reaching distribution in more than 5,000 coolers, and that advertising has helped drive early awareness and trial. The brand reached a mid-single digit market share position in some initial customers, he said. Management outlined steps to accelerate performance, including more frequent store visits to improve availability, adjustments to marketing communications to increase conversion and trial, distribution expansion (including shipments that began in Q3 to the largest e-commerce retailer in the pet food category), and the launch of a stand-up resealable pouch format that represents more than half of retail sales in the fresh feeding segment.
In cat feeding, Harmening said retail sales grew 6% in Q3, with Tastefuls posting mid-single digit growth and Tiki Cat delivering double-digit retail sales growth, supported by expanded distribution and innovation.
Foodservice, International, and efficiency initiatives
North America Foodservice organic net sales declined 3%, driven mainly by a decline in bakery flour, including a one-point headwind from index pricing, Bruce said. Segment operating profit fell 32% on unfavorable price/mix and lower volume, including yogurt divestiture impacts and higher input costs. Harmening said the business continued to execute on priorities in breakfast and frozen baked goods and held or grew dollar share in nearly 90% of priority businesses year to date, including maintaining leadership in cereal and K-12 schools. He also noted the company announced its entire K-12 school foods portfolio is now made without certified colors, achieving that milestone ahead of its summer 2026 commitment.
International organic net sales increased 1% in the quarter, reflecting the reversal of favorable timing benefits from the first half, Bruce said. Growth in India and China was partially offset by a decline in Europe. International segment operating profit rose 82% in constant currency, driven by favorable price/mix, lower SG&A, and higher volume, partially offset by higher input costs. Harmening said international retail sales were up 3% in the quarter on global platforms, calling out Häagen-Dazs and Nature Valley snack bars.
On cost savings, Harmening said the company remains on track to generate 5% gross savings in cost of goods sold through its holistic margin management productivity program in fiscal 2026, supported by digital advancements in logistics and manufacturing. Combined with its broader transformation efforts, management expects $600 million in total savings this fiscal year. Looking into fiscal 2027, the company expects holistic margin management savings of at least 4% of cost of goods sold and additional savings from its transformation initiative.
For the fourth quarter and full year, management reiterated its fiscal 2026 outlook: organic net sales down 1.5% to 2%; adjusted operating profit and adjusted diluted EPS down 16% to 20% in constant currency; and free cash flow conversion of at least 95% of adjusted after-tax earnings. Bruce said the company expects fourth-quarter improvement to be driven by mechanical factors including the 53rd week, partial reversal of third-quarter retailer inventory headwinds, and a favorable trade expense timing comparison, rather than requiring a major step-up in underlying business performance.
About General Mills (NYSE:GIS)
General Mills, Inc (NYSE: GIS) is a multinational consumer foods company that develops, manufactures and markets a broad portfolio of branded food products. Its product categories include ready-to-eat and hot cereals, baking mixes and ingredients, snacks and bars, refrigerated and frozen doughs, yogurt and other dairy products, and a variety of shelf-stable meals and meal components. The company’s portfolio features widely recognized consumer brands across grocery store, mass channel and foodservice outlets.
Founded in the early 20th century and incorporated under its current name in 1928, General Mills has grown through both internal brand development and strategic expansion to become a global food company.
