General Mills’ turnaround is working, according to company executives, but you wouldn’t know it based on its plummeting sales, volumes and stock price.
The company sales dropped 6.8% to $4.5 billion in its first quarter ending Aug. 24, and year-over-year volumes in its North American retail segment slid 16 percentage points and 2% in foodservice in the region. Retail sales in the region also were hit hard, dropping 13% in the period.
Together, these declines contributed to a 24% drop in General Mills’ operating profit for North American retail and a 1% dip in the region’s food service operating profit in the quarter.
And yet, CEO Jeff Harmening told investors that he is “pleased” with the company’s performance and that it is making positive progress on its turnaround thanks to price cuts, innovation and stepped-up advertising investments that are wooing back price-conscious shoppers who have been buying less and trading down to private label to save money amid lingering inflation and mounting uncertainty around the impact of tariffs.
“We continue to see consumers seeking value and prioritizing their spending on key benefits like protein, bold flavors and feelings of nostalgia from brands they love” while they navigate “economic uncertainty, global conflicts and changing food policy regulations,” Harmening said in prepared comments.
Against this landscape, he added, “the most important job we have in fiscal 2026 is restoring volume-driven organic sales growth. To achieve this, we are leaning into what makes our brands remarkable for consumers. This means investing to strengthen our value, product news, innovation, advertising and visibility in store and online.”
Pricing also remains an important tool in today’s environment, Harmening said.
“Our goal is to make price/value adjustments in roughly two-thirds of our [North American retail] portfolio in fiscal ’26. We got a bit more than half of that reflected in the market in Q1, with elasticities in line with our expectations. We expect to complete the remainder of that work in Q2, and we’ll track closely adjust where necessary to ensure we continue to see ROIs in line with our expectations,” he said.
Close review of General Mills’ Nielsen-measured in-market performance suggests price cuts helped improve pound trends and increase volume share across eight of the company’s top 10 US categories, Harmening added.
The company also grew household penetration for its US portfolio for the first time in three years, he said.
Beyond price cuts
While price cuts are an effective short-term tool to boost volume share, they are “not sufficient to drive lasting growth,” Harmening said.
“Sustainable, profitable growth comes from making sure that all elements of remarkability – product, packaging, messaging, omnichannel execution and value – truly resonate with consumers,” he said.
To that end, innovations including Cheerios Protein, Progresso Pitmaster soups and Mott’s Fruit-filled Bars are boosting total net sales from innovation in North American retail 25% this year, according to the company.
It also plans to “bring more compelling product news,” including renovation on Pillsbury refrigerated dough, additional protein innovation, such as Annie’s Super Mac, and “more remarkable innovation, like our Totino’s Ultimate Pizza,” Harmening said.
Packaging innovations, including collaborations, increase access and buzz
“On remarkable package design, we leveraged our price-pack architecture toolkit to deliver new sizes and package formats to meet key price points for consumers in Q1, helping drive Nielsen-measured pounds up high single digits on salty snacks and low single digits on fruit snacks,” Harmening said.
It also will generate buzz via packaging collaborations with the Netflix series Wednesday and musical Wicked for increased seasonal offerings.
Stepped up advertising resonates with consumers online and in stores
General Mills also saw significant gains from enhanced social media and other marketing campaigns in the quarter.
For example, the company’s social led “Must Cinnadust” campaign drove a 500% increase in social engagement for Cinnamon Toast Crunch alongside increases in pounds, pound share and dollar share for the cereal in the first quarter.
Looking forward, General Mills plans to boost sales through a GameDay omnichannel activation that will include collaborations with several football all-stars, Harmening said.
Through these activations and others, Harmening reiterated that he is “pleased with the progress we made in driving greater remarkability” across General Mills’ North American retail segment, and he said he is confident the company is “on the right track to returning this business to volume growth in fiscal ’26.”
With that, the company reaffirmed its 2026 outlook, which includes organic net sales between an increase of 1% and a decrease of 1%, and a 10% to 15% drop in adjusted operating profit and adjusted diluted earnings per share.
