General Mills (NYSE:GIS) saw its stock decline 3.6% Tuesday morning after the company reduced its fiscal 2026 guidance, citing a challenging consumer backdrop. The Minneapolis-based food maker, whose portfolio includes household names such as Cheerios and Betty Crocker, lowered expectations for organic net sales and profit margins.
Management now anticipates organic net sales will fall between 1.5% and 2% in fiscal 2026. That is a downgrade from the prior outlook that called for organic net sales to be down 1% to up 1%. Alongside that sales revision, the company adjusted its profitability forecasts. General Mills now sees adjusted operating profit and adjusted diluted earnings per share declining 16% to 20% in constant currency, a steeper reduction than the earlier forecast of a 10% to 15% decline.
The company pointed to several headwinds behind the weaker forecast. In its announcement, General Mills cited weak consumer sentiment, heightened uncertainty, and significant volatility as factors that have pressured category growth and changed consumer purchasing patterns. Management added that the recovery in volumes has been slower and more expensive than initially expected.
Despite the near-term setback, the company emphasized strategic actions it believes will support longer-term performance. General Mills said it is rolling forward its "Remarkability playbook" and increasing investments behind its large, established brands. The company highlighted that it owns eight brands that each produce more than $1 billion in retail sales, and that it intends to focus innovation on prevailing consumer trends.
As part of the innovation push, General Mills expects new products to contribute roughly a 25% increase in net sales in fiscal 2026, targeting trends it described as bold flavors, familiar favorites, and better-for-you attributes. Management framed these moves as part of an ongoing transformation.
"Since launching our Accelerate strategy six years ago, we’ve been hard at work transforming General Mills," said Jeff Harmening, chairman and CEO. "We’ve strategically reshaped nearly a third of our portfolio, built advantaged digital capabilities, and delivered industry-leading cost efficiency."
On cash generation, the company reiterated its target for free cash flow conversion, maintaining a goal of at least 95% of adjusted after-tax earnings for fiscal 2026.
Management's revised guidance and commentary underscore the near-term pressures facing packaged-food companies as consumer demand patterns and cost dynamics shift. General Mills is positioning investments in product innovation and brand strength to counteract those pressures while keeping a high free cash flow conversion target as a financial discipline.