Q3 2025 Earnings Summary
- General Mills plans to generate significant cost savings, including an incremental $100 million above their Holistic Margin Management (HMM) savings, which they intend to fully reinvest back into the business to drive growth and competitiveness.
- The company is confident in improving performance in key categories such as cereals and snacks starting in the fourth quarter, supported by increased media investment, innovation, and alignment with consumer preferences. For example, new products like Cheerios Protein and Nature Valley Granola Protein have been well received, catering to consumer demand for functional benefits like protein.
- Successful strategic initiatives in revitalizing major brands like Blue Buffalo, Pillsbury, and Totino's through pricing adjustments, enhanced marketing, and innovation have proven effective, and the company plans to replicate these strategies across other brands to drive growth.
- Retailer inventory headwinds, particularly in the Pet segment, led to a 5-point sales drag this quarter, and Pet inventory levels remain volatile, which may continue to impact future performance.
- Challenges in maintaining market share due to pricing gaps and inadequate marketing investment, especially in key categories like fruit snacks and cereal, could hinder growth as competitors and private labels gain ground.
- Significant reinvestment needed in pricing, marketing, and innovation to regain competitiveness may pressure margins and profit growth in the near term, as the company plans to utilize cost savings primarily for reinvestment rather than margin expansion.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | -5% YoY | Q3 2025 total revenue declined 5% from $5,099.2M to $4,842.2M, driven largely by domestic market weakness, particularly in North America Retail, which saw a steeper decline that outweighed more muted international headwinds. |
North America Retail | -7% YoY | Domestic net sales fell 7% YoY (from $3,242.1M to $3,009.1M), indicating serious challenges in the U.S. channel including lower volumes and possibly inventory adjustments, marking a shift from previously stronger performance. |
International | -4% YoY | International sales dropped 4% YoY to $651.3M, reflecting regional headwinds that are less severe than in North America; this segment continues to face market-specific challenges compared to the prior period but with relatively muted declines. |
Snacks | -5.4% YoY | U.S. Snacks net sales fell about 5.4% (from $1,052.4M to $996.0M), underscoring competitive pressures and lower volumes as seen in previous periods, which further impacted the domestic performance profile in this category. |
Cereal | -9.6% YoY | Cereal sales declined approximately 9.6% YoY (from $843.4M to $762.8M), suggesting that unfavorable price/mix dynamics and softer consumer demand played a major role, contrasting with prior periods when cereal sales were stronger. |
Convenient Meals | -10.3% YoY | Convenient Meals dropped 10.3% YoY (from $840.2M to $754.1M), largely due to unfavorable net price realization, reduced volume, and increased cost pressures—challenges that emerged more distinctly in Q3 2025 compared to the previous period. |
Dough | +7% YoY | Dough sales rose about 7% YoY (from $605.1M to $647.5M), a notable outlier relative to other categories, benefiting from a favorable shift in product mix and effective cost-saving initiatives which have improved margins compared to earlier periods. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Organic Net Sales | FY 2025 | no prior guidance | Expected to decline by 2% to 1.5% for FY 2025. | no prior guidance |
Adjusted Operating Profit | FY 2025 | no prior guidance | Expected to decline by 8% to 7% in constant currency for FY 2025. | no prior guidance |
Adjusted Diluted EPS | FY 2025 | no prior guidance | Expected to decline by 8% to 7% in constant currency for FY 2025. | no prior guidance |
Free Cash Flow Conversion | FY 2025 | no prior guidance | Expected to be at least 95% of adjusted after-tax earnings for FY 2025. | no prior guidance |
Retailer Inventory | Q4 2025 | no prior guidance | No material changes in retailer inventory are anticipated in Q4 2025. | no prior guidance |
Trade Expense Phasing | Q4 2025 | no prior guidance | Expected to negatively impact Q4 2025 net sales by 1.5 points and Q4 2025 operating profit by 9 points. | no prior guidance |
Increased Commercial Investments | Q4 2025 | no prior guidance | Expected to be a 13‐point headwind to Q4 2025 operating profit, including trade promotion, media expenses, and early investments for FY 2026 launches. | no prior guidance |
M&A Impact | Q4 2025 | no prior guidance | Expected to be a 2‐point headwind to Q4 2025 operating profit due to the Canada yogurt divestiture and Whitebridge acquisition. | no prior guidance |
Organic Sales Growth | FY 2025 | The company aims to accelerate organic sales growth and specifically volume growth by leveraging a remarkable experience framework to improve market share. | no current guidance | no current guidance |
Profit Outlook | FY 2025 | Investments are expected to impact the profit outlook for the back half of FY 2025, positioning the company for stronger growth in FY 2026 and beyond. | no current guidance | no current guidance |
Dilution Impact – Yogurt Divestiture | FY 2025 | expected to have a low single-digit percentage dilutive impact. | no current guidance | no current guidance |
Dilution Impact – White Bridge Acquisition | FY 2025 | expected to have a de minimis dilution impact. | no current guidance | no current guidance |
Incentive Compensation | FY 2025 | A partial reset of incentive compensation is expected, with payouts slightly less than initially planned but above last year's rate. | no current guidance | no current guidance |
Consumer Behavior | FY 2025 | Observations of prolonged value-seeking behavior among consumers have influenced investment strategies. | no current guidance | no current guidance |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Cost Savings | Q1 and Q2 emphasized HMM productivity savings to offset inflation, with discussions highlighting cost management initiatives and reinvestment strategies. | Q3 confirms continued focus with 5% COGS HMM savings for fiscal 2025, plans for additional savings in fiscal 2026 and beyond, and leveraging these savings for reinvestment in innovation and brand capabilities. | Consistent focus with an increased scale of initiatives and positive sentiment regarding financial benefits. |
Market Share and Competitiveness Improvements | Q1 and Q2 noted gradual market share progress via new product launches, improved customer service, and strategic investments, particularly in North America and select categories. | Q3 reported strong market share gains across several segments (pet food, foodservice, international markets) along with targeted enhancements using the remarkable experience framework, despite some category headwinds. | Consistent emphasis with enhanced efforts; sentiment remains positive but with cautious optimism due to some persistent headwinds. |
Innovation and New Product Development | Q1 and Q2 discussed various innovation efforts, including incremental new product introductions (Totino's, Blue Buffalo) and marketing adjustments that contribute around 5% of the business. | Q3 showcased a broader innovation push with “big bet” launches (Cheerios Protein, Life Protection Formula salmon, new soup lines, and licensing partnerships such as Marvel and Harry Potter) driving dynamic portfolio expansion. | Enhanced focus on innovation with more diverse and high-profile product launches, reflecting a very positive outlook. |
Brand Revitalization through Pricing and Marketing Adjustments | Q1 and Q2 highlighted pricing adjustments, advertising campaigns, and pack size modifications aimed at countering prolonged value-seeking behavior and improving brand competitiveness. | Q3 continued the effort under the “remarkable experience framework,” detailing improvements in Pillsbury refrigerated dough, Totino's hot snacks, and addressing price gaps in U.S. Snacks. | Consistent effort in brand revitalization with sustained positive sentiment and ongoing strategic pricing and marketing investments. |
Retailer Inventory and Supply Chain Challenges (Pet Segment) | Q1 reported improved service levels and better supply chain reliability; Q2 noted normalized retailer inventories and effective digitized supply chain operations. | Q3 encountered unexpected retailer inventory headwinds, particularly impacting the pet segment with a notable decline in organic net sales and mid-single-digit decreases in key areas. | A negative shift as previous improvements give way to renewed operational challenges in retailer inventory management. |
Strategic Portfolio Reshaping, Acquisitions, and Divestitures | Q1 and Q2 discussed bolt-on acquisitions, pending divestitures (North American yogurt), and the strategic use of proceeds for share repurchases to reshape the portfolio. | Q3 detailed completed steps such as the Canada yogurt divestiture, anticipated U.S. divestiture, and the North America Whitebridge Pet Brands acquisition driving strong momentum (e.g., Tiki Cat’s performance). | Consistent and advancing portfolio reshaping strategy with positive sentiment regarding future growth potential. |
International Sales and Regional Performance Challenges | Q1 and Q2 mentioned mixed regional performance: growth in Europe and Brazil with consistent challenges in China due to macroeconomic factors. | Q3 highlighted continued difficulties in China and Brazil with organic net sales declines, counterbalanced by growth in distributor markets and select international channels (e.g., robust Haagen-Dazs performance in Europe and Australia). | Ongoing challenges remain in certain key regions, leading to a mixed sentiment with positive areas offset by persistent headwinds. |
Input Cost Inflation and Price/Mix Pressures | Q1 reported moderate inflation (3%–4%) with minor price/mix issues; Q2 confirmed a rise to 4% with prolonged value-seeking behavior affecting margins. | Q3 emphasized significant input cost inflation and unfavorable price/mix pressures, resulting in compressed gross margins and a notable negative impact on operating profits. | Worsening sentiment as inflationary pressures intensify; increased negative impact on margins compared to previous periods. |
Customer Service and Operational Enhancements | Q1 detailed gradual improvements in customer service and operational reliability across channels; Q2 reinforced these gains through supply chain digitization initiatives. | Q3 offers fewer details on customer service; references to operational adjustments are more peripheral and overshadowed by other issues discussed. | Less emphasis in the current period with no significant change in sentiment, suggesting a lower priority compared to other pressing topics. |
Profitability Forecast Adjustments and Operating Margin Trends | Q1 provided limited details but hinted at phased improvements; Q2 noted investments and inflation pressures with margins approaching 2019 levels despite challenges. | Q3 reported revised outlooks with an 8%–7% decline in adjusted operating profit in constant currency, a 140 basis point drop in operating margins, and explicit headwinds due to higher costs and increased investment spending. | A clear negative trend in profitability and margin performance, with more pronounced forecast adjustments reflecting a tougher operating environment. |
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Future Investments
Q: What are your investment plans for fiscal '26 beyond Q4?
A: We plan to reinvest in fiscal '26, focusing on sharpening our price points, enhancing our marketing, and launching new products. Consumers are seeking value, and we aim to improve our competitiveness starting in Q4 and carrying into next year. We're stepping up our marketing spend, particularly on big brands like Blue Buffalo, Pillsbury, and Cereal. We also have some really good new products coming in the first half of next year. -
Tailwinds and Headwinds
Q: What are the key tailwinds and headwinds for next year?
A: You've got most elements right. A significant 5-point headwind on profit is expected due to an upcoming event we previously flagged. We'll also see some annualization impact from investments made this year. We're building flexibility to invest in improving growth trends and competitiveness. We'll provide more details on commercial investments when we give guidance in Q4. -
Innovation Plans
Q: How will innovation activity in fiscal '26 compare to '25?
A: Innovation as a percentage of sales is still lagging pre-pandemic levels, though we're up significantly this year versus last. Next year, our theme is fewer but bigger innovations. We have a few big innovations coming in the first half of next year, and we'll support our existing innovations more robustly. Good examples include Cheerios Protein, Pit Master, Nature Valley Granola Protein, and StickBars in Asia and Europe. -
Pricing Strategy
Q: How do you know your price investments are enough?
A: We evaluate category by category to ensure our pricing is in the right zone where our marketing can work effectively. We've successfully executed price adjustments and improved marketing on big brands like Dough, Totino's, and Blue Buffalo. The work has been completed across the company and will start to manifest in Q4 and into next year. It's an ongoing capability, as we need to be agile with changing contexts. -
Snacks Business Performance
Q: What's happening with fruit snacks and snack bars?
A: For fruit snacks, the category is down, and we haven't distinguished ourselves on the share front. We're addressing this by improving value, introducing innovation like Harry Potter fruit snacks, and enhancing marketing. On snack bars, although a competitor was off-shelf a year ago, we feel good about our business. Innovations like Nature Valley Granola Protein are doing well, and we have new products like Cheerios Protein bars coming up. -
Consumer Behavior Impact
Q: Are GLP-1 drugs affecting snack sales?
A: While GLP-1 use is increasing, we believe the slowdown is more due to declining consumer confidence and value-seeking behavior. We've seen similar trends in dog treats, which aren't affected by GLP-1s. Food-at-home consumption remains elevated, and consumers are more value-conscious, purchasing staples over discretionary items. -
Savings Reinvestment
Q: Will savings targets be fully reinvested?
A: The purpose of the $100 million plus additional cost savings is to free up resources to reinvest for growth. We're committed to improving growth trends and competitiveness. We'll provide more details on the nature of these investments when we give guidance for next year. -
Cereal Business Outlook
Q: What gives you confidence in improving cereal sales?
A: Our third-quarter cereal performance was about as expected, factoring in some inventory build-up. In Q4, we have an increase in media spend and a really good promotion planned. Long-term, success depends on giving consumers what they want, such as Cheerios Protein, which offers functional benefits while tasting good. -
Inventory Headwinds
Q: Will retailer inventory headwinds continue?
A: In Pet, we experienced a 5-point drag this quarter from retail inventory adjustments across some of our biggest retailers. Pet inventory is more volatile due to its e-commerce nature. Our inventory levels are now even lower, and for the year, retailer inventory is about flat to where it was at the beginning. We don't expect further significant inventory changes in Q4.
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