General Mills (NYSE:GIS) said its fiscal 2027 first-quarter results came in ahead of its expectations as improved retail trends and early cost-savings progress helped offset continued input-cost pressure. The company reaffirmed its full-year outlook, while emphasizing innovation, supply-chain transformation and debt reduction as key priorities.
Organic net sales were flat from a year earlier, while reported net sales fell 3% to $4.4 billion, primarily reflecting last year’s U.S. yogurt divestiture. Adjusted operating profit declined 11% in constant currency to $634 million, and adjusted diluted earnings per share fell 13% in constant currency to $0.75.
Innovation and retail momentum
General Mills is seeking to strengthen organic sales by increasing what it calls “remarkability,” centered on innovation and renovation across product offerings, packaging, marketing, channel execution and value. Chief Operating Officer Dana McNabb said the company entered the year with a stronger foundation after making pricing adjustments in fiscal 2026 to address consumer value concerns.
North America Retail sales trends improved by roughly two percentage points versus fiscal 2026, according to McNabb. The company highlighted innovation and renovation efforts involving Cheerios, Annie’s, Pillsbury, La Tiara and Wanchai Ferry, alongside expanded use of influencers and new agency partners.
In cereal, General Mills said Honey Nut Cheerios Protein contributed to a portfolio of protein cereals that generates roughly $200 million in retail sales and has been growing at a strong double-digit rate across Cheerios, Nature Valley and GHOST brands. Retail sales of Cinnamon Toast Crunch, Lucky Charms and Reese’s Puffs rose at a low-single-digit rate in the first quarter, compared with a mid-single-digit decline in fiscal 2026.
The company said total U.S. cereal retail-sales growth improved two points from the prior quarter. It has added smaller formats intended to provide lower entry price points and larger formats designed to offer lower prices per ounce for bigger households.
General Mills also cited progress in Pillsbury Refrigerated Dough. It renovated 70% of its canned dough line during the quarter, adding more cinnamon, icing and flakiness, while introducing hot honey and maple varieties of Grands! biscuits and new fruit rolls. Pillsbury household penetration increased, and retail sales stabilized after eight consecutive quarters of declines, McNabb said.
Pet, foodservice and international performance
North America Pet organic net sales were flat year over year. Double-digit growth in cat feeding and low-single-digit growth in pet treats was offset by a high-single-digit decline in dog feeding. The segment also included an extra month of Whitebridge Pet Brands results as the business was aligned with General Mills’ fiscal calendar.
McNabb said cat feeding posted at least mid-single-digit retail-sales growth for an eighth consecutive quarter. Tiki Cat delivered double-digit retail-sales growth and gained share, while BLUE Tastefuls retail sales rose by the mid-single digits. Love Made Fresh retail sales grew roughly 30% compared with the prior quarter, aided by its resealable pouch offering and improved on-shelf availability.
However, the company said Wilderness remained its most challenged dry dog feeding business. Its first-quarter retail-sales decline was similar to fiscal 2026, and management said a broader review of its product, packaging, positioning and value will take time to implement.
North America Foodservice organic net sales increased 4%, led by cereal and frozen meals. The segment held or grew share in all of its priority businesses, according to the company, and segment operating profit rose 12% in constant currency, driven by favorable price mix.
International organic net sales increased 4%, supported by distributor markets, India and China. Segment operating profit increased 15% in constant currency as higher volume and lower input costs more than offset unfavorable price mix and a double-digit increase in media investment. General Mills said renovations of Häagen-Dazs Cookies & Cream and Belgian Chocolate helped produce double-digit retail-sales growth for both varieties.
Margins, costs and transformation
Chief Financial Officer Kofi Bruce said higher input costs and lower volume weighed on overall profitability. Adjusted gross margin fell 90 basis points to 33.3%, while adjusted operating margin declined 130 basis points to 14.4%. The margin decline reflected higher input costs, partially offset by favorable price mix, as well as increased media spending as a percentage of sales.
The company expects annual input-cost inflation at the high end of its previously projected 4% to 5% range. Bruce cited higher spot prices for freight, grains and packaging during the first quarter, as well as new Canadian tariffs.
General Mills is targeting at least $3 billion in cumulative savings by fiscal 2030, including $750 million in fiscal 2027. About $2 billion is expected to come from its holistic margin management program, while about $1 billion is expected to come primarily from a global transformation initiative that includes changes to the supply chain.
McNabb said General Mills recently reached an agreement with a strategic partner to establish a new pack center, which is intended to provide additional packaging flexibility and support e-commerce needs.
Cash flow and reaffirmed outlook
First-quarter operating cash flow declined to $298 million, mainly due to changes in taxes payable, including tax expense related to last year’s yogurt divestiture. Capital investments totaled $90 million, and the company paid $330 million in dividends. It did not repurchase shares during the quarter.
Bruce said the company’s near-term capital allocation focus is reducing leverage toward its long-term target of three times net debt to adjusted EBITDA. General Mills expects to maintain its current dividend rate, direct excess cash toward debt reduction, deprioritize acquisitions and avoid share repurchases in the near term.
The company reaffirmed its fiscal 2027 guidance:
- Organic net sales growth of down 1.5% to up 0.5%.
- Adjusted operating profit growth of down 13% to down 8% in constant currency.
- Adjusted diluted EPS of $3.00 to $3.20.
- Free cash flow conversion of at least 95% of adjusted after-tax earnings.
General Mills also said it completed the divestiture of its Brazil business earlier in the month and remains on track to close the sale of its mainland China Häagen-Dazs shops later in the calendar year.
About General Mills (NYSE:GIS)
General Mills, Inc is a global food company that manufactures and markets branded consumer food products. Its portfolio includes cereals, snacks, refrigerated and shelf-stable meals, baking products, yogurt, and pet food.
The company’s brands include Cheerios, Betty Crocker, Pillsbury, Nature Valley, Old El Paso, Yoplait, Blue Buffalo, and Häagen-Dazs in markets where it owns or licenses the brand. General Mills sells its products through grocery stores, mass merchants, convenience stores, e-commerce channels, restaurants, and other foodservice providers.
General Mills traces its history to the Minneapolis Milling Company, founded in 1856, and adopted the General Mills name in 1928.
