General Mills Q3 Earnings: Sales Miss and Guidance Cut Weigh on Stock

General Mills (GIS) reported mixed third-quarter results, with adjusted earnings per share (EPS) beating expectations but revenue missing estimates. The packaged food giant also lowered its full-year outlook, citing weaker-than-expected organic sales growth and retailer inventory reductions. Shares fell about 4% premarket as investors digested the weaker guidance, which pointed to continued challenges in consumer demand and macroeconomic uncertainty. The stock has been consolidating in a range between $56 and $65 since early December, and these results are unlikely to break it out of that trend.

Earnings and Revenue Performance

General Mills posted adjusted EPS of $1.00, beating consensus estimates of $0.97, though it marked a 15% decline in constant currency. Revenue came in at $4.84 billion, down 5% year-over-year and below the expected $4.97 billion. Organic net sales declined 5%, significantly missing the consensus forecast of a 2.67% decline.

Breaking down segment performance:

- North America Retail revenue declined 7.2% to $3.01 billion, missing the estimate of $3.08 billion. Organic net sales for this segment fell 6%.

- North America Foodservice revenue rose 0.7% to $555.3 million but missed expectations of $573.1 million.

- Pet segment revenue was nearly flat at $623.7 million but below estimates of $638.6 million.

- International sales declined 4.2% to $651.3 million, missing the forecast of $680.4 million.

Organic revenue declines were driven by lower pound volume, retailer inventory reductions, and slowing demand in snacking categories. Management noted that retailer de-stocking was a larger headwind than anticipated, particularly in North America Retail and the Pet segment.

Key Drivers Behind the Results

General Mills cited multiple factors behind the sales shortfall. One major issue was a sharper-than-expected reduction in retailer inventories, which created a four-percentage-point gap between retail sales and organic sales growth. Additionally, snacking categories showed signs of weakness, with U.S. morning foods and snacks experiencing pressure. However, the company highlighted areas of strength, including improving trends in Pillsbury refrigerated dough and Totino’s hot snacks, where increased investment has started to pay off.

Despite the topline weakness, the company managed to expand gross margin by 40 basis points to 33.9%, supported by cost savings from its Holistic Margin Management (HMM) initiatives. However, adjusted gross margin declined by 60 basis points to 33.4%, weighed down by higher input costs and unfavorable price realization.

Consumer Behavior and Market Trends

General Mills' results provide a snapshot of evolving consumer trends in the packaged food industry. The company noted that U.S. consumers remain highly price-sensitive, with demand softening in non-essential food categories like snacks. This aligns with broader retail trends, where shoppers continue to prioritize value amid persistent inflationary pressures.

Away-from-home food demand, including sales to restaurants and institutions, showed some resilience, with the foodservice segment posting modest gains. However, international markets were mixed, with weakness in China and Brazil partially offset by growth in distributor markets and Europe & Australia.

Pet food, another key business for general mills, showed signs of stagnation. While wet pet food and treats saw mid-single-digit growth, dry pet food demand lagged, likely reflecting shifts in consumer spending habits.

Guidance and Market Implications

Management lowered its fiscal 2025 outlook, now expecting organic net sales to decline between 1.5% and 2%, compared to its prior forecast of flat to up 1%. Adjusted EPS is expected to decline between 7% and 8% in constant currency, down from previous guidance of a 1% to 3% decline.

This revision underscores ongoing headwinds in the packaged food sector. The company said it plans to accelerate investments in brand communication, innovation, and consumer value in fiscal 2026, funded by cost savings initiatives. General Mills expects its HMM productivity program to generate at least $600 million in gross cost savings next year, alongside additional efficiency measures targeting at least $100 million in incremental savings.

Technical Analysis and Stock Outlook

Shares of gis have been trading in a narrow range between $56 and $65 since early December, reflecting investor caution amid mixed fundamentals. Given the lack of a clear catalyst in the latest earnings report, the stock is unlikely to break out of this range in the near term.

From a technical perspective, support remains firm around the $56 level, with resistance near $65. The stock’s muted reaction to the earnings miss suggests that much of the weakness may already be priced in. However, sustained weakness in consumer demand could keep a lid on upside potential.

Tariff Impact and Broader Market Considerations

General Mills did not incorporate any potential impact from U.S. import tariffs in its guidance, citing uncertainty around their timing and scope. Given the company’s reliance on imported ingredients and global supply chains, new tariff policies could pose additional cost pressures and impact pricing strategies in future quarters.

Broader macroeconomic factors, including inflation trends and consumer confidence, will also play a key role in determining the company’s near-term performance. With the Federal Reserve’s rate decisions and trade policy developments in focus, investors will be watching for signs of improving demand trends in packaged foods.

Conclusion

General Mills delivered mixed Q3 results, with an earnings beat overshadowed by weak revenue and a disappointing outlook. Retailer inventory reductions and softer snacking demand weighed on topline performance, leading to a downward revision in full-year guidance. While the company remains committed to cost efficiencies and brand investment, the near-term outlook remains challenging.

Shares of GIS are likely to remain range-bound in the $56-$65 area, with no immediate catalyst for a breakout. Investors will look for signs of demand stabilization and further clarity on tariff risks before reassessing the stock’s longer-term trajectory.