Shares of General Mills fell about 3.6% in premarket trading after the company lowered its fiscal 2026 outlook, attributing the revision to soft consumer demand and a pace of volume recovery that has lagged earlier expectations.
The revised outlook was disclosed in a release issued ahead of the Consumer Analyst Group of New York Conference. In that release, Chairman and CEO Jeff Harmening will tell attendees that the company has been executing its Accelerate strategy to transform General Mills.
Harmening is also set to say that, despite operating in what the company describes as a "volatile operating environment," management remains committed to the company's "Remarkability playbook," which the company asserts is enhancing brand competitiveness.
On the numbers, General Mills now expects organic net sales to decline between 1.5% and 2% for fiscal 2026. That replaces the prior range, which anticipated a decline of 1% to an increase of 1%. The firm also lowered its profitability guidance: adjusted operating profit and adjusted diluted earnings per share are now forecast to fall 16% to 20% in constant currency, compared with the earlier outlook of a 10% to 15% decline.
The company attributed the downgrade to "weak consumer sentiment, heightened uncertainty, and significant volatility," factors it said have compressed category growth and disrupted typical purchasing patterns. Those forces, General Mills said, have produced a "slower pace and higher cost of volume recovery than initially expected."
Despite the softer outlook, company executives emphasized ongoing investments intended to support long-term competitiveness. Management highlighted continued spending on brand remarkability, consumer-centric innovation, and expanded digital capabilities.
General Mills also reiterated a forecast that new products will drive roughly a 25% increase in net sales in fiscal 2026. The company maintained its target of at least 95% free cash flow conversion.
Analysis
The guidance reset reflects a more cautious near-term view on consumer behavior and category performance. While management continues prioritizing brand investment and innovation, the company acknowledges that those efforts have not yet translated into the volume recovery originally projected. The retained free cash flow conversion target and the emphasis on new-product net sales suggest management is balancing investment with cash-generation goals.
Key points
- General Mills cut fiscal 2026 organic net sales guidance to a decline of 1.5% to 2%, down from a prior range of -1% to +1%.
- Adjusted operating profit and adjusted diluted EPS are now expected to fall 16% to 20% in constant currency, versus an earlier projection of a 10% to 15% decline.
- The company continues to invest in brand remarkability, consumer-focused innovation, and scaled digital capabilities, and expects new products to add about 25% to net sales in fiscal 2026; free cash flow conversion target remains at least 95%.
Risks and uncertainties
- Persistent weak consumer sentiment could further suppress category growth and purchasing patterns, limiting top-line recovery; this primarily affects consumer staples and packaged food sectors.
- Heightened uncertainty and significant market volatility may raise the cost and delay the timing of volume recovery, putting additional pressure on margins and earnings.
- If the pace of new-product adoption or the effectiveness of brand investments falls short of expectations, sales and profit recovery could remain muted, creating continued earnings risk.
Conclusion
General Mills' guidance cut signals near-term softness in consumer demand and a more protracted path to volume recovery than management had anticipated. The company is maintaining investments aimed at boosting brand competitiveness and innovation while reaffirming a high free cash flow conversion target. Investors will likely watch upcoming commentary at the conference and subsequent results for evidence that those investments are driving the intended recovery in volume and profitability.