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General Mills, Inc. (NYSE: GIS) has released its fiscal 2026 first-quarter results, showing a complex financial landscape. The company has managed to stay aligned with its expectations in terms of organic net sales, while surpassing them slightly in adjusted operating profit and EPS.
 

Q1 Sales Fall 7% While EPS and Profit Outperform Forecasts

The first quarter of fiscal 2026 presented a mixed bag for General Mills. The company reported net sales of $4.5 billion, a decrease of 7% compared to the previous year. This decline was attributed to a 4-point headwind from divestitures and acquisitions, with organic net sales down by 3%. Despite this, the company’s performance was in line with expectations for organic net sales and slightly ahead in terms of adjusted operating profit and EPS.

Adjusted operating profit stood at $711 million, down 18% in constant currency, while adjusted diluted EPS was $0.86, a 20% decline in constant currency terms. These results were better than anticipated, driven by favorable phasing of input cost inflation and timing benefits in the International segment.

Operating profit saw a significant increase of 108%, reaching $1.7 billion, primarily due to a $1.05 billion gain from the U.S. yogurt divestiture. However, adjusted operating profit experienced an 18% decline in constant currency, mainly due to lower adjusted gross profit dollars. The adjusted gross margin was down by 120 basis points to 34.2% of net sales, primarily due to higher input costs. Despite these challenges, General Mills managed to maintain its competitive edge, holding or gaining pound share in 8 of its top 10 U.S. categories.

The company’s North America Retail segment faced a 13% decline in net sales, driven by lower pound volume and an 8-point headwind from yogurt divestitures. On the other hand, the North America Pet segment saw a 6% increase in net sales, bolstered by the acquisition of Whitebridge Pet Brands. The International segment also showed positive results, with net sales increasing by 6% due to growth in India, North Asia, and Europe. These diverse outcomes highlight the varied challenges and opportunities faced by General Mills in the current market environment.
 

General Mills Targets Volume Growth Through Strategic Investments

Looking ahead, General Mills has reaffirmed its full-year fiscal 2026 outlook, emphasizing its commitment to restoring volume-driven organic net sales growth. The company plans to achieve this through strategic investments in consumer value, product innovations, and brand building. These efforts are expected to initially improve pound growth and market share, with a return to dollar growth anticipated once the price investment phase is completed. The company also plans to launch Blue Buffalo into the U.S. fresh pet food sub-category in the second quarter, marking a significant strategic investment.

General Mills expects the combination of growth investments, input cost inflation, and normalization of corporate incentive expenses to outpace cost savings from its Holistic Margin Management program and other efficiency initiatives. Despite these challenges, the company remains optimistic about achieving its financial targets for the year. Organic net sales are projected to range between a 1% decline and a 1% increase, while adjusted operating profit and adjusted diluted EPS are both expected to decrease by 10 to 15% in constant currency.

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