General Mills Earnings: (GIS) Stock Down 22% YTD as EPS, Revenue Seen Falling

General Mills, Inc. (NYSE: GIS), the iconic food conglomerate behind brands like Cheerios, Yoplait, and Pillsbury, is facing significant challenges as it navigates a shifting consumer landscape and increased competitive pressures. The next earnings report is scheduled for tomorrow before market open, putting even more pressure on the company to deliver results.

Analysts expect General Mills to report an average earnings per share (EPS) of $0.82, down from $1.07 in the same quarter last year, reflecting a decline in profitability. Revenue is projected at $4.52 billion, representing a year-over-year decrease of 6.87%, as the company faces softer consumer demand and increased competition in the packaged foods sector. The company's stock is currently trading above $49, down -23.15% year to date.

General Mills recently reported its fiscal 2025 fourth-quarter and full-year results, revealing a decline in both net sales and earnings. This, coupled with a conservative outlook for fiscal 2026, has raised questions about the company's ability to maintain its market position and deliver sustainable growth.

For the fourth quarter ending May 25, 2025, General Mills reported net sales of $4.6 billion, a 3% decrease year-over-year. Organic net sales also fell by 3%. Full-year net sales totaled $19.5 billion, a 2% decrease from the prior year. Diluted earnings per share (EPS) for the year was $4.10, a 5% decrease.

Several factors contributed to this downturn. High inflation has prompted consumers to seek more affordable alternatives, impacting demand for General Mills' products, particularly in the salty snacks and pet food segments. The company is also facing increased competition from private-label brands, further eroding its market share. In response, General Mills has increased promotional activities and reduced prices, which, while aimed at boosting sales volume, have also led to higher expenses and impacted profitability.

Looking ahead to fiscal 2026, General Mills anticipates organic net sales to range between a 1% decrease and a 1% increase. Adjusted operating profit is expected to decline by 10% to 15% year-over-year, and adjusted diluted EPS is projected to decrease by 10% to 15% in constant currency. These projections reflect the company's expectations of continued economic uncertainty and its impact on consumer behavior.

To combat these challenges, General Mills has announced several strategic initiatives. The company aims to achieve at least $100 million in cost savings by fiscal 2026 through efficiency measures. It also plans to incur a $70 million charge in the current quarter due to severance expenses associated with ongoing restructuring efforts. The company is also investing in product innovation, including the national launch of Blue Buffalo into fresh pet food later in calendar 2025.

While the prevailing sentiment surrounding General Mills is cautious, a contrarian perspective suggests there might be untapped potential. The company's iconic brands possess enduring appeal and strong brand equity.

While consumers are currently opting for cheaper alternatives, history suggests that brand loyalty often returns when economic conditions improve. General Mills' efforts to streamline operations and invest in innovation, though currently weighing on profitability, could ultimately position the company for a strong rebound.

Furthermore, the market may be underestimating the potential of the Blue Buffalo brand in the growing pet food market. This could provide a crucial growth engine for the company in the coming years. While the near-term outlook is undoubtedly challenging, dismissing General Mills entirely might be premature.

General Mills is navigating a complex and evolving market environment. The company's success will depend on its ability to adapt to changing consumer preferences, manage costs effectively, and drive innovation. Analysts and stakeholders will be closely watching the company's progress in the coming quarters.