Shares of General Mills tumbled 7 percent Tuesday after the Cheerios maker slashed its full-year sales and profit outlook, blaming stubborn inflation and a “challenging” consumer backdrop for squeezing volumes.
The Minneapolis-based food giant now expects organic net sales to fall between 1.5 percent and 2 percent for fiscal 2026, a sharp reversal from its December view that sales could range from down 1 percent to up 1 percent.
Adjusted diluted earnings per share are projected to drop 16 percent to 20 percent in constant currency, widening from an earlier forecast of a 10 percent to 15 percent decline.
Management said in a press release that weakening consumer sentiment, heightened uncertainty and significant volatility have curbed category growth and reshaped shopping patterns. Shoppers are trading down, buying less, or waiting for promotions, pressuring volumes and raising the cost of regaining lost ground.
The company, whose brands include breakfast staple Cheerios and sports-themed cereal Wheaties, said it is making “meaningful progress” in strengthening brand relevance and positioning the business for long-term growth. But those efforts are unfolding against a tougher macroeconomic landscape than anticipated.
Adjusted operating profit is now expected to decline 16 percent to 20 percent in constant currency, versus the prior outlook of down 10 percent to 15 percent.
One bright spot is free cash flow conversion, still pegged at 95 percent or more of adjusted after-tax earnings, signaling disciplined cost control even as top-line momentum fades.
For investors, however, the immediate takeaway was clear. Growth is harder to come by, and recovery may take longer than hoped.
