MW Cheerios parent General Mills will sacrifice some profit to drive sales, and the stock is dropping

By Steve Gelsi

While General Mills will look to keep retail and foodservice prices low, with a focus on sales growth

General Mills Inc.'s stock sank toward a five-year low in early trading Wednesday after the maker of Cheerios and Nature Valley granola bars warned profits will drop in its coming fiscal year, as it is willing to hold down prices to help boost sales.

General Mills $(GIS)$ said it expects category growth to be below its long-term projections in the face of a "continued challenging consumer backdrop."

General Mills' stock dropped 3.6% in premarket trading, to put it on track to open at the lowest prices seen since March 2020.

Citing less benefit from price and mix, General Mills said it expects fiscal 2026 earnings per share, excluding the impact of currency moves, to fall by 10% to 15% from 2025's total of $4.21 a share, or a range of $3.58 a share to $3.79 a share.

Analysts surveyed by FactSet expected General Mills' 2026 EPS, including the impact of currencies, to drop by 5.2% to $3.99 a share, according to FactSet data.

Following another quarter of revenue and volume declines, the company said its "number one goal" for the coming year is to restore sales growth.

To do that, General Mills said it would increase investment in consumer value, which suggests it will keep prices down - even if that cuts into profits. The company will also invest in product news, innovation and brand building, including a "significant" brand-extension launch of Blue Buffalo fresh pet food later this year.

While it plans to take out $100 million in costs in the coming year, investments in growth, input cost inflation, including recently enacted tariffs and other factors will outpace them.

General Mills said profit for the fiscal fourth quarter to May 25 fell 47.5% to $294 million, or 53 cents a share, from $557.5 million, or 98 cents a share, in the year-ago quarter.

Its adjusted fourth-quarter profit of 74 cents a share, which excluding nonrecurring items, beat the FactSet consensus EPS estimate of 71 cents a share.

Revenue declined 3.3% to $4.56 billion, below the FactSet consensus of $4.59 billion, after falling 5% the previous quarter to also miss expectations.

Volume for the latest quarter declined 2 percentage points, as weakness in North America retail and North America foodservice offset growth in North America pet food and international.

Price and sales mix were down 1 percentage point, as declines in retail and foodservice offset an increase in pet food.

Gross margin, a measure of profitability on sales, fell 3.2 percentage points to 32.4%, due to increased input costs, unfavorable mark-to-market effects, and unfavorable net price realization and mix, the company said.

General Mills' stock has fallen 16.3% in 2025 through Tuesday, while the Consumer Staples Select Sector SPDR ETF XLP has gained 3.5% and the S&P 500 index SPX has advanced 3.6%.

-Steve Gelsi

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June 25, 2025 09:13 ET (13:13 GMT)

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