MINNEAPOLIS — General Mills Inc. cut its fiscal 2025 guidance as headwinds in its North America Retail business and sluggish US snack sales pulled down third-quarter results and macroeconomic uncertainties cloud its fourth-quarter outlook.

“While we’ve made good progress in competing more effectively across many parts of our portfolio, we are not satisfied with our Q3 results, and we are moving quickly to make the necessary changes to improve our momentum,” Jeffrey Harmening, chairman and chief executive officer, said in a March 19 webcast about the quarterly performance.

General Mills now projects full year adjusted earnings per share (diluted) and adjusted operating profit to drop between 7% and 8%, well below its prior forecast of 2% to 4% declines. Similarly, organic net sales are now expected to decrease 1.5% to 2% versus the previous outlook of flat to 1%.

The company already had trimmed its fiscal 2025 guidance when reporting second-quarter results in December. Then, at the Consumer Analyst Group of New York (CAGNY) conference in February, Harmening and chief financial officer Kofi Bruce warned the company likely would fall short of its 2% to 3% long-term growth algorithm.

Also at the event, General Mills didn’t update its 2025 forecast, as Harmening said the company was still trying to get a bead on Nielsen market data, customer orders and US economic policy – namely tariffs – amid the chaotic start to the new presidential administration.

“Our Q3 results finished below our expectations, driven largely by greater-than-expected retailer inventory headwinds and a slowdown in snacking categories – two developments we initially called out at the CAGNY conference last month,” Harmening said. “We’ve continued to improve our market share trends across our pet, foodservice and international businesses, with each segment posting positive pound-share results in the third quarter. We delivered improved performance in US refrigerated dough and hot snacks, two businesses where we made incremental investments last quarter, though our share in other snacks categories was more challenged.

“Based on our Q3 results and moderated expectations for Q4, we’ve adjusted our fiscal 2025 guidance. And we’re adapting our plans and stepping up our investment to address these recent headwinds, strengthen our competitiveness as we close the year and deliver improved growth for fiscal ’26. To fund that investment, we’re targeting industry-leading levels of ‘holistic margin management’ (HMM) cost savings and anticipated new initiatives in fiscal ’26 designed to further boost efficiency to enable investment for growth.”

Plans call for greater investments in innovation, brand support and consumer value. General Mills estimates that HMM will save 5% on the cost of goods sold in fiscal 2026, amounting to $600 million in gross productivity savings. Additional cost control efforts now under review are expected to bring another $100 million or more in savings.

Bruce said the tariff situation remains fluid and isn’t reflected in General Mills’ 2025 guidance. The company, too, is still finalizing the sale of its US yogurt business, including Yoplait and other brands, to Lactalis Group, a deal announced last September.

“Note that our outlook does not include the impact of the pending US yogurt divestiture, as the transaction has yet to close,” Bruce said. “And while recent new US tariffs on steel and aluminum and Chinese imports are not expected to be material to our fiscal 2025 results, we have not included any impact from potential tariffs that are paused or may be enacted in the future, as the trade environment is rapidly evolving at this time.”

For the third quarter ended Feb. 23, General Mills’ net income fell 7% to $625.6 million, equal to $1.12 per diluted share on the common stock, from $670.1 million, or $1.17 per diluted share, a year earlier. Adjusted net earnings were $551.3 million, or $1.00 per diluted share, versus $674 million, or $1.17 per diluted share, a year ago. Analysts, on average, had forecast adjusted EPS of 96¢.

Total net sales for the quarter dropped 5% year over year to $4.84 billion from $5.1 billion. Organic net sales also declined 5%, reflecting decreases of 4% in volume and 1% in price/mix, General Mills said. Operating income dipped 2% to $891.4 million but on an adjusted basis was down 12% to $800.8 million.

“Organic net sales were down 5%, which was below our expectations for three main reasons,” Harmening said. “First, our Nielsen-measured retail sales were down 1% in the quarter. The 4-point gap between organic sales and retail sales growth was driven primarily by unexpected retailer inventory headwinds in NAR (North America Retail) and Pet – which we referenced at CAGNY and did not see a reversal as we closed the quarter – and by the expected reversal of favorable-timing items from Q2. Second, we saw a deceleration in US snacks retail sales trends in the quarter, driven by softer category growth and increased competitive activity. And third, we saw a slowdown in demand in US away-from-home channels in Q3 that pressured organic sales growth in North America Foodservice, even as we continued to gain share in those channels.

“In response to these headwinds, we’ve moved quickly to adjust our plans, leveraging what’s working on businesses like Pillsbury, Totino’s and Blue Buffalo and applying it more broadly across our portfolio, with the goal of driving improved growth moving forward.”

North America Retail’s third-quarter net sales decreased 7% to $3.01 billion. Organic net sales were down 6% on declines of 5% in volume and 1% in price/mix. Net sales fell by 10% for the US Morning Foods unit, by 6% for US Snacks and by 3% for US Meals & Baking Solutions. Segment operating profit dropped 14% to $648.1 million, mainly due to lower volume, input cost inflation, and unfavorable net price realization and mix, General Mills said.

General Mills’ US Snack sales fell 6% during the third quarter.
Source: ©JAMMY JEAN – STOCK.ADOBE.COM

“While we’ve made progress in important parts of our NAR portfolio, we’ve seen challenges in others, including recent softness in US Snacks, including snack bars, fruit snacks and salty snacks,” Harmening said.

“We are investing to bring consumers added value through price-pack architecture changes and by addressing key price gaps. We’re launching strong new products and core renovation, and in fruit snacks we’re introducing exciting new licensing partnerships, including a partnership with Warner Brothers to launch Harry Potter fruit snacks this summer. On snack bars, we’re innovating to bring more consumer-relevant benefits like indulgence and protein. In fact, General Mills brands account for 8 of the top 10 new products in the snack bar category in fiscal ’25.”