General Mills (GIS) reported first-quarter results that beat analyst expectations on both earnings and revenue, but the stock fell in premarket trading on Monday as the company signaled that progress on market-share recovery remains uneven.
Adjusted earnings per share came in at $0.75, exceeding the $0.72 forecast for a 4.2% surprise, while revenue of $4.4 billion topped the $4.34 billion estimate by about 1.4%. The company's shares dropped roughly 1.2% to $35.03 in premarket trading after closing at $35.45 on Friday.
Despite the beat, General Mills acknowledged that its North America retail segment continued to face headwinds. Retail takeaway consumption declined 2% on a like-for-like basis in Q1, though the company noted its dollar share improved sequentially by 2 percentage points and its share performance improved across the majority of categories.
"We are not all the way to growth yet," said Dana McNabb, chief operating officer, during the earnings call.
Management provided granular updates on key categories. Cereal share losses narrowed sharply—to 0.1 percentage points from 0.9 in the year-ago period—while soup share improvement followed a similar trajectory, declining just 0.1 versus 0.4 last year. Totino's business declines were cut in half. Fruit snacks grew roughly 13% in Q1, though the company flagged increasing competition from smaller insurgent brands. Pet segment results included a low-single-digit headwind from inventory normalization as customer mix shifts toward lower-inventory customers; the Whitebridge acquisition added approximately one point of pet growth with about 15 basis points flowing to overall company results on a one-month lag.
On pricing, General Mills said inflation ran around 4% in Q1, near the low end of its 4% to 5% range, and is expected to run similarly through Q2 and Q3 before rising to approximately 6% in Q4.
The company also highlighted its product innovation push, noting that new products now account for 5% of net sales, up from 3% two years ago, following a roughly 50% increase in new product introductions. E-commerce now represents more than 20% of human food sales and 30% of pet food sales. CEO Jeff Harmening pointed to the acquisition strategy as a growth driver, citing Tiki Cat, which has grown at double-digit rates since its purchase.
Financially, General Mills reported a gross profit margin of 33.7% over the trailing twelve months. Net debt to EBITDA leverage sits slightly above 4x against a stated target of 3x, a level management expects to reach over the next couple of years. The debt-to-equity ratio stands at 1.89.
Cost savings are on track to reach $750 million in fiscal 2027 and $3 billion by fiscal 2030, split between $2 billion from Harmony, Modernization and Margin initiatives and $1 billion from transformation efforts. Approximately 75% of anticipated wheat needs for the year are currently hedged.
The board reaffirmed its dividend, marking 56 consecutive years of dividend maintenance.
