General Mills’ Q3'25 Earnings: Retail Headwinds Weigh on Growth, Cost-Savings Fuel Future Investments
- Hardik Shah
- Mar 20
- 3 min read
TL;DR
Revenue Decline: Q3 net sales fell 5% YoY to $4.8 billion, primarily due to retailer inventory reductions.
Profitability Pressures: Adjusted operating profit dropped 13% in constant currency; adjusted EPS fell 15%.
Cost-Savings for Growth: The company plans $600M+ in cost savings to fund brand investments and innovation in FY26.
Financial Results
General Mills operates across four primary segments: North America Retail, North America Pet, North America Foodservice, and International. Its core brands span cereals, snacks, pet food, refrigerated dough, and frozen foods, with Blue Buffalo, Pillsbury, and Haagen-Dazs among key product lines.
General Mills Q3'25 Earnings:
Revenue: $4.8B (down 5% YoY), with organic net sales also declining 5%.
Operating Profit: $891M (down 2%), with adjusted operating profit at $801M (down 13% in constant currency).
EPS: Reported diluted EPS was $1.12 (down 4%), while adjusted diluted EPS was $1.00 (down 15%).
“Our third-quarter organic net sales finished below our expectations, driven largely by greater-than-expected retailer inventory headwinds and a slowdown in snacking categories.” – Jeff Harmening, Chairman & CEO.
Outlook & Guidance
FY25 Adjustments:
Organic net sales expected to decline 1.5%–2% (previously forecasted to be flat to +1%).
Adjusted operating profit and adjusted EPS now projected to decline 7%–8% (previously -2% to -4%).
FY26 Investments:
$600M+ in Holistic Margin Management (HMM) cost savings to drive reinvestments.
Focus on innovation, price positioning, and brand marketing to regain sales momentum.
Operational Performance
Consumers Prioritizing Value Over Brand Loyalty
General Mills noted that consumer confidence remains weak, with spending patterns similar to 2008 levels.
There is a greater demand for value-oriented products, especially in snacking categories like fruit snacks and bars, as consumers shift toward staples such as baking ingredients and essentials.
Retail inventory reductions created a 4-point gap between organic net sales growth and retail sales, leading to a sharper-than-expected sales decline.
“Consumers are seeking value as much or more than they had when our fiscal year began… The same would be true of why restaurant occasions are down slightly”. - Jeff Harmening, CEO
Potential Impact of GLP-1 Weight Loss Drugs
There has been discussion around whether GLP-1 drugs (e.g., Ozempic, Wegovy) are affecting snacking behavior.
General Mills believes the main reason for the slowdown in snacks is economic-driven value-seeking, not necessarily health-conscious changes.
Supporting evidence: Pet treats also saw a decline, despite having no connection to GLP-1 drugs.
“GLP-1 use is increasing, but we don’t see it as the main driver of snack category weakness. Instead, consumers have become much more value-conscious”. - Jeff Harmening, CEO
Key Business Milestones
M&A Activity: Completed acquisition of Whitebridge Pet Brands, expanding its premium pet food portfolio.
Product Innovations: Launched Cheerios Protein, Totino’s bold flavors, and Old El Paso Pitmaster line to drive category engagement.
“We’re focused on improving our sales growth in fiscal 2026 by stepping up our investment in innovation, brand communication, and value for consumers.” – Jeff Harmening, CEO.
Challenges & Risks
Retailer Inventory Reductions: Affected both North America Retail (-7% sales) and North America Pet (-5% organic net sales). The company expects this to normalize over time, but it remains a near-term headwind.
Snacking Category Slowdown: Consumers pulled back on discretionary spending, impacting fruit snacks and snack bars.
Cost Pressures: Inflation and supply chain inefficiencies led to a 140 bps decline in adjusted operating profit margin.
Potential new U.S. import tariffs and retaliatory tariffs could increase input costs in 2025, but General Mills has not yet factored this into guidance.
International sales (-4%) were affected by currency fluctuations and weaker demand in China and Brazil, though some European and Australian markets performed well.
Strategic Initiatives
Cost-Savings & Efficiency Gains
$600M+ in productivity savings through HMM in FY26.
Additional $100M in cost-cutting programs planned to enhance operational efficiency.
Brand & Innovation Investments
Marketing ramp-up: Double-digit increase in advertising for Blue Buffalo, Pillsbury, and cereal brands.
New Product Pipeline: Expecting a strong innovation cycle in FY26, focusing on fewer but bigger bets.
“We are committed to accelerating growth trends and ensuring flexibility in our commercial investments to stay competitive.” – Kofi Bruce, CFO.
Capital Allocation
Dividends & Share Buybacks
$1.0B in dividends paid through Q3, in line with prior year.
$902M in share repurchases, down from $1.6B a year ago.
Debt & Liquidity
Net interest expense rose 12% to $136M, driven by higher debt levels.
Cash flow conversion remains strong, with at least 95% of adjusted after-tax earnings expected to convert to free cash flow.
The Bottom Line
General Mills faced significant inventory-related headwinds and a weaker snacking category, leading to lower-than-expected sales and profitability. However, the company is doubling down on cost efficiency and reinvestment in marketing, innovation, and price positioning to drive a return to growth in FY26. While near-term pressures persist, strategic cost savings and stronger brand support could help General Mills regain momentum.
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