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General Mills (NYSE: GIS) reported its fiscal 2025 third-quarter results, reflecting a decline in net sales and operating profit. The company reported net sales of $4.8 billion, a 5% decrease from the previous year. This decline was attributed to lower pound volume and unfavorable foreign currency exchange rates. The organic net sales also fell by 5%, impacted by retailer inventory reductions and a reversal of certain favorable timing items from the second quarter. Operating profit decreased by 2% to $891 million, while adjusted operating profit fell by 13% in constant currency terms to $801 million.

The adjusted operating profit margin also saw a decline of 140 basis points to 16.5%. Despite these challenges, General Mills managed to maintain a gross margin increase of 40 basis points to 33.9%, driven by cost savings and favorable mark-to-market effects. However, the adjusted gross margin decreased by 60 basis points, reflecting input cost inflation and unfavorable net price realization.

Diluted earnings per share (EPS) stood at $1.12, a 4% decline, while adjusted diluted EPS was $1.00, down 15% in constant currency. The company attributed these declines to lower operating profit, higher net interest expense, and a higher effective tax rate.
 

General Mills Fails to Impress Analysts with Q3 Results

General Mills’ third-quarter performance fell short of market expectations. Analysts had anticipated an EPS of $1.0 and revenue of $4.99 billion. The reported EPS of $1.12 exceeded expectations, but the revenue of $4.8 billion was below the forecast.

The shortfall in net sales was primarily due to greater-than-expected inventory headwinds from retailers and a slowdown in snacking categories. The company’s organic net sales growth lagged behind Nielsen-measured retail sales by 4 points, highlighting the impact of inventory reductions and timing reversals.

The North America Retail segment experienced a 7% decline in net sales to $3.0 billion, driven by unfavorable price realization and lower volume. The segment’s operating profit decreased by 14%, primarily due to input cost inflation and unfavorable pricing mix. In contrast, the North America Foodservice segment reported a 1% sales increase and maintained its operating profit, benefiting from favorable pricing and cost savings. The International segment faced a 4% decline in net sales, with a significant impact from unfavorable foreign currency exchange.
 

GIS Expects Net Sales to Decline Between 1.5% to 2% for Fiscal 2025

General Mills updated its full-year fiscal 2025 outlook, reflecting the challenges faced in the third quarter. The company now expects organic net sales to decline between 1.5% and 2%, compared to the previous expectation of flat to a 1% increase. Adjusted operating profit and adjusted diluted EPS are projected to decrease by 7% to 8% in constant currency, reflecting lower net sales. Despite the current challenges, General Mills remains committed to its long-term strategy of driving sustainable, profitable growth and enhancing shareholder returns.

Looking ahead to fiscal 2026, General Mills plans to increase its investment in innovation, brand communication, and consumer value. The company aims to fund these initiatives through continued cost-saving measures, targeting a 5% savings in the cost of goods sold, amounting to approximately $600 million. Additionally, the company is exploring new cost-saving initiatives to achieve at least $100 million in savings for fiscal 2026. These efforts are expected to support the company’s growth strategy and improve its competitive position in the market.

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