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GENERAL MILLS INC (GIS)·Q1 2026 Earnings Summary

Executive Summary

  • Q1 FY26 net sales were $4.52B, down 7% reported and down 3% organic, as price investments and trade timing weighed; adjusted diluted EPS was $0.86 (down 20% constant currency) while GAAP EPS was $2.22 driven by a $1.05B gain on the U.S. yogurt divestiture .
  • Versus S&P Global consensus, GIS delivered a slight beat on revenue ($4.52B vs $4.52B*) and adjusted EPS ($0.86 vs $0.82*), and EBITDA modestly above consensus ($0.84B vs $0.82B*) .
  • Management reaffirmed FY26 guidance: organic net sales -1% to +1%; adjusted operating profit and adjusted EPS -10% to -15% constant currency; ≥95% free cash flow conversion; and ~4% reported net sales headwind from divestitures, acquisitions, FX and the 53rd week .
  • Call catalysts: early evidence price investments are restoring pound share (8 of top 10 U.S. categories) and household penetration gains; innovation/new products up ~25% in Q2 pipeline; Blue Buffalo fresh pet cooler rollout (target 5,000 by Q2) with margin phasing/timing benefits expected to unwind in Q2 .

What Went Well and What Went Wrong

What Went Well

  • “Our primary goal in fiscal 2026 is to restore organic sales growth… grow or hold pound share in 8 of our top 10 U.S. categories” (CEO Jeff Harmening) .
  • Innovation acceleration: “new product volumes are already up 25%… backed by strong plans in baking and soup” (CEO) .
  • International strength with timing benefits: segment net sales +6% and operating profit +214% (≈3% net sales timing to unwind later), aided by price/mix and FX .

What Went Wrong

  • Organic net sales -3% on unfavorable price/mix and trade timing; adjusted gross margin -120 bps (34.2%), adjusted operating profit -18% constant currency .
  • North America Retail net sales -13% to $2.63B; operating profit -24% to $564M, pressured by lower volume (including yogurt divestiture impact) .
  • Q2 outlook: “operating profit to be down more in Q2 than Q1” as inflation phasing and International timing headwinds unwind; no contribution from U.S. yogurt in Q2 (post-close) .

Financial Results

MetricQ1 2025Q4 2025Q1 2026
Net Sales ($USD Billions)$4.85 $4.56 $4.52
Gross Margin (%)34.8% 32.4% 33.9%
Adjusted Gross Margin (%)35.4% 32.7% 34.2%
Operating Profit ($USD Billions)$0.83 $0.50 $1.73 (incl. $1.05B divestiture gain)
Operating Margin (%)17.2% 11.1% 38.2%
Adjusted Operating Profit ($USD Billions)$0.87 $0.62 $0.71
Adjusted Operating Margin (%)17.8% 13.7% 15.7%
Diluted EPS ($)$1.03 $0.53 $2.22
Adjusted Diluted EPS ($)$1.07 $0.74 $0.86

Segment breakdown – Q1 FY26:

SegmentNet Sales ($USD Millions)YoY %Operating Profit ($USD Millions)YoY %
North America Retail$2,625.5 -13% $564.2 -24%
International$760.2 +6% $65.7 +214%
North America Pet$610.0 +6% $112.9 -5%
North America Foodservice$516.7 -4% $70.6 -1%
Total Segment Operating Profit——$813.4 -15%

Organic and reported growth dynamics – Q1 FY26:

SegmentOrganic Net Sales GrowthReported Net Sales GrowthNotes
North America Retail-5% -13% Yogurt divestiture -8 pts; trade timing headwind
International+4% +6% ~3 pts timing benefit expected to unwind
North America Pet-5% +6% +11 pts Whitebridge acquisition
Foodservice+1% -4% Yogurt divestiture -5 pts
Total Company-3% -7% —

Consensus vs actual – Q1 FY26 (S&P Global):

MetricConsensusActual
Revenue ($USD Billions)$4.52*$4.52
Adjusted Diluted EPS ($)$0.82*$0.86
EBITDA ($USD Billions)$0.82*$0.84*

Values with asterisks retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Organic Net Sales GrowthFY 2026-1% to +1% -1% to +1% Maintained
Adjusted Operating Profit (CC)FY 2026-10% to -15% from $3.4B base -10% to -15% Maintained
Adjusted Diluted EPS (CC)FY 2026-10% to -15% from $4.21 base -10% to -15% Maintained
Free Cash Flow ConversionFY 2026≥95% ≥95% Maintained
Reported Net Sales Headwind from D&A/FX/53rd weekFY 2026~4% ~4% Maintained
Headwinds to Adjusted OP/EPSFY 2026Reset of corporate incentive and D&A (unquantified) ~5 pts from net D&A and ~3 pts from reset of corporate incentive Clarified
DividendNov 2025 Quarter$0.61 declared $0.61 declared (payable Nov 3, 2025) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 FY25)Previous Mentions (Q4 FY25)Current Period (Q1 FY26)Trend
Price investments & valueQ3 organic net sales below expectations; planned cost-savings to fund value Q4 investments drove improved pound share; trade timing headwind Price cliffs/gaps addressed; NAR household penetration up; pounds improved in top 10 categories Improving execution; volume response building
Innovation/new product pipelineEmphasis on stepping up innovation More Q4 investments ahead of FY26 launches New product volumes +25%; ~5% of sales from new products vs ~3.5% prior Accelerating
Supply chain/demand planning & AIHMM productivity and efficiency programs highlighted Global transformation initiative to unlock $100M savings AI-enabled forecasting to free marketers; efficiency gains Process modernization progressing
Pet segment momentum & fresh launchPet segment mixed; retailer inventory headwinds; treats/wet positive Pet op profit -3% Q4; media investment up Fresh pet rollout: 1,000 coolers by end Sept; 5,000 by Q2; Wilderness softness; cat feeding strength Launch underway; category mix adjusting
International/timingInternational down 4% in Q3; FX headwinds Q4 International +11% sales; op profit +50% Q1 International +6% sales; op profit +214%; ~3% timing to unwind Strong with recognized timing effects
GLP-1/macro & consumerMacro uncertainty; retailer inventory reductions Challenging consumer backdrop, tariffs impact noted GLP-1 modest impact; protein/fiber innovation offsets; food-away-from-home traffic stable Managed headwinds; targeted innovation

Management Commentary

  • Jeff Harmening (CEO): “Our primary goal in fiscal 2026 is to restore organic sales growth… grow or hold pound share in 8 of our top 10 U.S. categories” .
  • Jeff Harmening: “We are increasingly confident that our approach is working… new product volumes are already up 25%… backed up by really strong plans in baking and soup” .
  • Kofi Bruce (CFO): Q1 beat vs internal expectations driven by lighter inflation phasing (~2% vs ~3% annual) and ~$20M International trade timing; both largely unwind in Q2 .
  • Dana McNabb (Group President NAR & Pet): Household penetration grew in NAR for the first time since FY22; base price adjustments across ~two-thirds of portfolio largely completed in Q1; finishing in Q2 .

Q&A Highlights

  • Path to volume growth: Pounds in top 10 categories improved ~1 pt vs Q4; flour/desserts weighed; holding or gaining pound share in 8 of top 10 categories .
  • Margin phasing: Q1 benefited from lighter inflation and International timing; expect larger OP decline in Q2 as phasing/timing unwind and no yogurt contribution .
  • Pet segment: Wilderness softness; Tastefuls and Life Protection performing; fresh pet coolers ramp to 5,000 by Q2; cat feeding and treats positive; shipment timing headwinds in Q1 .
  • GLP-1 and consumer dynamics: Modest category impact; innovation leaning into protein/fiber (e.g., Cheerios Protein) .
  • Demand planning/AI: Technology-enabled forecasting freeing teams to focus on demand generation; improved efficiency .
  • Away-from-home competition: QSR value messaging notwithstanding, commercial traffic flat; non-commercial channels growing ~2%, where GIS over-indexes and is gaining share .

Estimates Context

  • Q1 FY26 vs S&P Global consensus: Revenue $4.52B actual vs $4.52B*; Adjusted EPS $0.86 actual vs $0.82*; EBITDA $0.84B* actual vs $0.82B* .
  • Forward quarters: Q2 consensus revenue ~$4.78B*, EPS ~$1.02*; Q3 consensus revenue ~$4.56B*, EPS ~$0.89* (context for expectations) Values retrieved from S&P Global.

Key Takeaways for Investors

  • Q1 quality beat vs consensus on adjusted EPS and revenue, but core profitability pressured by price investments and timing; expect Q2 margin step-down as phasing reverses before back-half improvement .
  • Reaffirmed FY26 guide reduces downside uncertainty; clarity on headwinds (~5 pts D&A/acquisitions, ~3 pts incentive reset) and cash conversion ≥95% supports capital returns .
  • Volume recovery narrative intact: pound share gains, household penetration increases, and base price resets largely complete by Q2 are constructive for organic growth trajectory .
  • Innovation cadence accelerating (new products ~5% of sales; volumes +25%), aligning with GLP-1 trends (protein/fiber) and seasonal categories (baking/soup), a potential driver of estimate revisions if sustained .
  • Pet is mixed near term (Wilderness softness, shipment timing) but fresh launch provides a new growth vector; monitor cooler install velocity and category mix shift .
  • International outperformance includes timing; expect normalization in Q2; still a positive mix contributor with favorable price/mix and FX .
  • Trading stance: Near-term volatility into Q2 on margin normalization; constructive back-half setup with innovation and value initiatives; catalysts include sustained share gains, fresh pet rollout milestones, and progress toward FY26 targets .

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