General Mills, Inc. (GIS Quick QuoteGIS - Free Report) reported third-quarter fiscal 2026 results, wherein both the top and bottom lines missed the Zacks Consensus Estimate. Both net sales and earnings experienced year-over-year declines.
 
The company posted adjusted earnings of 64 cents per share, which missed the Zacks Consensus Estimate of 74 cents. The bottom line also declined 37% year over year on a constant-currency (cc) basis, attributed to reduced adjusted operating profit and increased adjusted effective tax rate. However, the impact was partially offset by reduced net shares outstanding.

General Mills, Inc. Price, Consensus and EPS Surprise

General Mills, Inc. price-consensus-eps-surprise-chart | General Mills, Inc. Quote

Net sales dropped 8% to $4,436.7 million, including a six-point headwind from the impacts of divestitures and acquisitions, partially offset by a one-point benefit from foreign currency exchange. The top line also missed the Zacks Consensus Estimate of $4,479 million. Organic net sales also saw a 3% decline, mainly due to lower volume and unfavorable price realization and product mix. This performance lagged Nielsen-measured global retail sales by approximately 1.5 points.

GIS’ Quarterly Margin Performance

The adjusted gross margin declined 280 basis points (bps), reaching 30.6% of net sales, mainly due to elevated input costs, partly offset by the favorable net price realization and mix to gross margin, including the product mix benefit from the yogurt divestitures. We expected adjusted gross margin contraction of 140 bps.

General Mills’ adjusted operating profit dropped 32% in constant currency, impacted by reduced adjusted gross profit dollars. The adjusted operating profit margin was down 420 bps, reaching 12.3%. We expected an adjusted operating margin of 14.7% for the quarter.

Decoding GIS’ Segmental Performance

North America Retail: Revenues in the segment were $2,596.4 million, down 14% year over year, including a nine-point headwind from the divestiture of North American yogurt businesses. Net sales fell double digits in the Big G Cereal & Canada operating unit, including the impact of the yogurt divestitures, declined by high-single digits in U.S. Snacks and decreased by low-single digits in U.S. Meals & Baking Solutions. Organic net sales were down 4% compared with a 3% decline in Nielsen-measured retail sales, with the one-percentage-point gap primarily driven by changes in retailer inventory levels. 

Segment operating profit of $436.1 million fell 33% for both reported and in constant currency, mainly owing to lower volumes, including the impact of yogurt divestitures and elevated input costs. These pressures were partially offset by favorable net price realization and mix, as well as reduced selling, general, and administrative expenses.

North America Pet: Revenues rose 3% year over year to $640.5 million, including a six-point contribution from the acquisition of North American Whitebridge Pet Brands. Net sales rose double digits in cat food, up mid-single digits for pet treats, while dog food declined mid-single digits. Organic net sales fell 3% despite roughly 2% growth in all-channel retail sales, with the five-point gap driven largely by changes in retailer inventory.

Segment operating profit increased 1% to $102.8 million, roughly flat in constant currency.

North America Foodservice: Revenues were $496.4 million, which decreased 11%, including a seven-point headwind from yogurt divestitures. Organic net sales were roughly down 3%, primarily due to weakness in bakery flour, with one-point headwind from index pricing. 

Segment operating profit dropped 32% to $56.3 million, reflecting weaker price realization and mix, lower volumes (including the impact of yogurt divestitures) and continued input cost pressure.

International: Revenues in the segment were $696.3 million, up 7% year over year, including a six-point gain from foreign currency. Organic net sales increased 1%, with gains in India and China offset by declines in Europe. 

Segment operating profit increased to $33.6 million from $18 million a year ago, driven by favorable net price realization and mix, reduced SG&A expenses, and elevated volumes, partially offset by higher input costs.

GIS’ Financial Health Snapshot & Other Developments

General Mills ended the quarter with cash and cash equivalents of $785.5 million, long-term debt of $10,992.1 million and total stockholders’ equity (excluding noncontrolling interests) of $9,343.3 million.

General Mills generated $1,614.2 million in cash from operating activities in the nine months ended Feb. 22, 2026. Capital investments amounted to $355.5 million during the same period. The company paid out dividends worth $987 million and bought shares for $500 million in the aforementioned period.

What to Expect From GIS in Fiscal 2026?

General Mills is prioritizing a return to volume-led organic sales growth, but expects weaker category growth in fiscal 2026 due to a challenging consumer environment and reduced pricing tailwinds. To respond, the company is increasing investment in value, innovation and brand building, including expanding Blue Buffalo into fresh pet food.

However, higher growth investments, input cost inflation (including tariffs) and normalization of incentive compensation are expected to outweigh cost savings, putting pressure on profits. In addition, yogurt divestitures and the Whitebridge Pet acquisition are expected to reduce adjusted operating profit growth by roughly five percentage points in fiscal 2026.

The company has reaffirmed its fiscal 2026 outlook. Organic net sales are projected to be down 1.5-2%, while adjusted operating profit and adjusted earnings per share (EPS) are expected to decline 16-20% in constant currency. Free cash flow conversion is anticipated to be at least 95% of adjusted after-tax earnings. 

This Zacks Rank #4 (Sell) company’s shares have lost 19.1% in the past three months compared with the industry’s decline of 6%.

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