General Mills Stock Rises on Earnings. Investors Get Signs of Progress.

General Mills’ brands include Cheerios cereal. (Gabby Jones/Bloomberg)

Key Points

• General Mills posts better-than-expected adjusted earnings in its fiscal second quarter.
• General Mills faces challenges from high costs, shifting consumer preferences, and increased competition.
• The company’s stock had declined 26% this year coming into the report Wednesday.

General Mills stock gained on Wednesday after the packaged-food company reported better-than-expected quarterly earnings.

Shares were up 3.2% to $48.54.

For its fiscal second quarter ended in November, General Mills posted adjusted earnings of $1.10 a share, down 21% from a year ago but ahead of analysts’ consensus of $1.03.

Net sales fell 7% from the prior year to $4.9 billion, but topped Wall Street’s estimate of $4.78 billion. Most of the decline came from divestitures and acquisitions, with organic sales down just 1% from last year.

General Mills divested from its U.S. yogurt business in the first quarter of fiscal 2026, sold its Canada yogurt business, and acquired the Whitebridge Pet Brands in the third quarter of fiscal 2025. The divestiture came at a time of slowing demand and competition from yogurt brands such as Chobani and Danone.

General Mills, like many packaged-food companies, has been struggling with high costs, in part because of tariffs. The Trump administration’s efforts to deport immigrants, the increased use of weight-loss drugs, and a lapse in funding for food-stamp benefits during the government shutdown have hurt demand.

Shoppers are increasingly shifting to cheaper private labels and seeking products with shorter ingredient lists, healthier components, and innovative flavors. Except for the November quarter last year, General Mills’ net sales have declined year over year for nine quarters.

In the latest quarter, international organic sales grew 4% from a year ago, but the North American market remained weak. Excluding impact from divestitures and acquisitions, organic retail sales fell 3%, the food-service segment was flat, and the pet-food business posted a 1% growth.

To reignite sales, General Mills has stepped up new-product launches, revamped packaging, had stronger in-store events, and started offering package sizes at more affordable prices. The company has also increased advertising and marketing spending for product categories where brands can still win.

Those initiatives show signs of success. Organic sales volume in the North American retail business grew 1% after falling for several consecutive quarters. The company said it is growing pound share—market share measured by the total volume of product sold—in eight out of its top 10 categories this year.

Some products, such as Pillsbury dough and Cheerios Protein, have seen strong sales trends, the company said earlier this year. Investors will be watching whether the momentum will continue and whether sales of more brands will take off in the coming months.

“I’m really pleased with the way in North America has improved its momentum this year,” said CEO Jeff Harmening on the earnings call. “As we looked at the second half, the job to do really is to keep the momentum on the top line.”

The growth investments, North American yogurt divestitures, and higher corporate incentive expenses would hurt earnings in fiscal 2026, according to the earnings report.

But the company expects to “turn the corner on profitability” and achieve profit growth again in the fourth quarter of the current fiscal year, Harmening said.

Earlier this year, General Mills said it would close its in-house innovation unit and pause additional outside investments by its venture- capital arm. Management is also implementing cost-control initiatives that are meant to save at least $100 million this fiscal year.

Management said it’s confident in its plans for more improvement in the rest of the year and reaffirmed its fiscal-year forecast for flat organic net sales at the midpoint and a 10% to 15% drop in adjusted operating profit.

General Mills stock has been sliding since mid-2023. Shares are down 26% this year alone, compared with a 2.9% gain for the S&P 500 Consumer Staples Sector Index .

Write to Evie Liu at evie.liu@barrons.com