General Mills reported first-quarter earnings that exceeded Wall Street’s expectations, driven by a divestiture gain, despite slower sales. The maker of Cheerios and Blue Buffalo reaffirmed its full-year outlook, cautioning that EPS will remain under pressure as it invests to reignite volume-driven organic net sales growth. Notably, GIS executives have warned about a continued shift toward consumers eating at home rather than spending at restaurants. This is troubling news as the back-to-school season gets underway and the holiday shopping season begins in about two and a half months.
Besides Cheerios and Blue Buffalo, GIS also controls other top brands, including Cinnamon Toast Crunch, Betty Crocker, Nature Valley, and Yoplait. It delivered better-than-expected EPS and margin despite broad sales declines, with strength in International offset by weakness in North America Retail and Pet.
GIS Q1 Highlights (using Bloomberg Consensus data)
Earnings: Adjusted EPS $0.86 (vs. $1.07 y/y), topping estimates of $0.82.
Margins: Adjusted gross margin 34.2% (vs. 35.4% y/y), above 33.4% consensus.
Sales: Net sales $4.52B, down 6.8% y/y, in line with estimates.
North America Retail: $2.63B (-13% y/y, in line).
Foodservice: $516.7M (-3.6% y/y, slightly above).
Pet: $610M (+5.9% y/y, below est. $622.6M).
International: $760.2M (+6% y/y, above est. $736.3M).
Organic Performance
Organic net sales down 3% (vs. -2.9% est).
North America Retail -5% (vs. -4.8% est).
Pet -5% (vs. -2.9% est).
Foodservice +1% (vs. +0.2% est).
International +4% (vs. +2.4% est)
Organic sales volume -1 pt (in line).
Organic price/mix -2 pts (vs. -1.8% est).
GIS reaffirmed its full-year outlook for adjusted EPS to decline as much as 15% and organic sales between -1% to 1%.
GIS FY26 Outlook
Reaffirmed organic net sales guidance: -1% to +1% (vs. -1.07% consensus).
Maintains forecast for adjusted EPS to decline 10–15% in constant currency.
Expects adjusted operating profit down 10–15% in constant currency.
Food and beverage companies have faced lower volumes and softer demand as cash-strapped shoppers seek value.
One way consumers have tightened budgets is by buying more food for home rather than dining out. This trend began during the inflation surge under the Biden-Harris regime several years ago. Although inflation has eased during Trump’s second term, some consumers continue to cook at home.
“General Mills has said a rise in cooking at home among value-conscious consumers struggling with inflation has helped boost some of its staples, including rice and beans,” Bloomberg noted, adding, “Still, shoppers who are anxious about the economy have been cautious with their spending and turned to private-label options and smaller package sizes.”
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