By Connor Hart

General Mills has a long way to go to convince Wall Street that protein-packed cereals and spicy snack mixes can overcome broad-based malaise in the grocery aisles, analysts say.

The maker of Cheerios cereal and Betty Crocker cake mixes this year plans to launch products, ramp up marketing and cut prices in a push to return to volume-led sales growth. But analysts remain skeptical about whether the strategy will succeed.

"In an environment where top-line visibility is limited amidst a challenged consumer backdrop, we think it is difficult to have confidence that the top-line improvement embedded in guidance is achievable at this stage," UBS analysts said.

General Mills's fiscal 2026 outlook was weaker than anticipated, resulting in a selloff and investor unease. The analysts noted, though, that the guide doesn't assume performance improvements moving forward, making it a potentially conservative view.

On the one hand, General Mills stands to benefit from consumers eating more meals at home. Kroger said last week that economic jitters and rising restaurant prices are driving more shoppers to grocery stores, a trend that has helped other packaged-food makers. Campbell's said earlier this month that at-home cooking buoyed sales of its soups and pasta sauces, while McCormick & Co. on Thursday reported higher demand for seasonings.

This benefit, however, would likely be overshadowed by General Mills' turnaround efforts in the near term. The company said its product launches and heightened marketing will heavily weigh on its bottom line this year.

Despite calling the company's outlook disappointing, Stifel analysts remained optimistic. They said General Mills's investments will ultimately improve the company's volumes, as well as its ability to grow organic sales and profit.

UBS analysts were less convinced. "Volumes remain the biggest variable/point of uncertainty," they wrote, "as much depends on getting price points right, launching and supporting innovation that appeals to consumers, and seeing how elasticities respond."

Pricing remains a key piece of the puzzle. General Mills said it plans to lower prices on certain items, despite the hit that sales would take as a result.

Mizuho analysts said the company is being realistic about consumer sentiment. "Many center-store categories have priced well ahead of household income growth amid inflation and feature everyday prices exceeding consumers' buying power," they said in a research note.

The company has already lowered prices on certain products, such as Pillsbury baked goods and Totino's pizza rolls, which it said contributed to improved volume and market-share trends in the latest quarter.

Given this positive volume response, Mizuho analysts said they are cautiously optimistic for growth acceleration this year. "But it remains too early to buy the dip," they added.

Write to Connor Hart at connor.hart@wsj.com

(END) Dow Jones Newswires

June 27, 2025 13:32 ET (17:32 GMT)

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