General Mills (NYSE:GIS) executives said fiscal 2027 first-quarter trends showed sequential improvement in key North American Retail categories, while the company continues to address inflation, pet-food weakness and changing consumer shopping behavior.
During the company’s earnings call question-and-answer session, Chief Operating Officer Dana McNabb said the company improved dollar sales by 2 points sequentially and improved share performance in a majority of its categories. Management did not provide quarterly Nielsen estimates, but said it expects dollar performance to improve through the year.
North America Retail Focuses on Price Mix and Innovation
“We are not all the way to growth yet, so we still have work to do,” McNabb said.
Management pointed to improving share trends in several large categories. In cereal, General Mills’ share decline narrowed to 0.1 points in the first quarter from a 0.9-point decline a year earlier, according to McNabb. In soup, the share decline narrowed to 0.1 points from 0.4 points in the prior-year period.
Two areas remain priorities: Totino’s and fruit snacks. McNabb said declines in Totino’s were cut in half, though the company intends to support the business with Blasted Rolls innovation, merchandising and renovation. In fruit snacks, the category grew about 13% in the first quarter, but General Mills has faced more competition from smaller brands gaining distribution. The company recently launched Annie’s Organic Nature Pals, a high-fiber fruit snack, and plans additional renovation of its core offerings.
Executives also highlighted new-product performance in protein cereal, including Honey Nut Cheerios, as well as Totino’s Blasted Rolls, La Tiara Mexican products and Love Made Fresh pet food. General Mills said innovation and renovation have increased to about 5% of net sales from 3% two years ago.
Inflation Expected to Rise Late in the Year
Chief Financial Officer Kofi Bruce said first-quarter inflation was around 4%, at the low end of the company’s previously discussed 4% to 5% range. He expects inflation to remain at roughly similar levels through the second and third quarters before rising to about 6% in the fourth quarter based on current conditions and the company’s hedge positions.
Bruce said inflation and the company’s Holistic Margin Management, or HMM, cost savings are still expected to broadly offset each other for the full year. Excluding the effect of the company’s 53rd week, he said General Mills expects gross margins to be roughly flat. Operating-margin comparisons will also be affected by an incentive-compensation reset, he said.
Wheat costs are running somewhat above the company’s overall inflation expectations, Bruce said, alongside pressure from freight, fuel, fats and oils, and packaging. General Mills is about three-quarters hedged through the year across its commodity exposure, he said.
For North America Foodservice, Bruce said flour pricing is indexed to commodity prices and passed through regularly, making the effect dollar-margin neutral. He expects that dynamic to shift from a low-single-digit headwind in the previous year to a low-single-digit tailwind this year.
McNabb said HMM remains the company’s first line of defense against inflation, but General Mills may use its broader strategic revenue-management tools as needed, including trade spending, mix and list pricing.
Pet Business Sees Uneven Trends
General Mills said its pet business has shown strength in cat food, treats and Love Made Fresh, while dry dog food remains a challenge. McNabb said the dry dog-food category declined at a mid-single-digit rate, with Blue Buffalo Life Protection Formula performing roughly in line with the category. Declines accelerated in the Wilderness brand, however.
The company is using its “remarkability” framework to reassess Wilderness’ product, packaging, marketing and communication. McNabb compared the effort to prior work on the Tastefuls cat-food business, which took roughly 18 to 24 months to improve and has since returned to growth.
Chief Executive Officer Jeff Harmening said pet-food humanization remains the largest long-term trend in the category. He cited Love Made Fresh, Tiki Cat and the return to growth in treats as areas of encouragement. The company also plans Life Protection Formula innovation in the second half of the fiscal year.
Bruce said an additional month of Whitebridge results contributed about 1 percentage point of growth in pet and approximately 15 basis points of growth for the company overall. He maintained the company’s expectation for a low-single-digit full-year inventory headwind in pet as its customer mix shifts toward retailers holding lower inventory levels.
Marketing, E-Commerce and Transformation Plans
McNabb said media spending was up modestly in the first quarter and is expected to rise at a low-single-digit rate for the full year. She said General Mills is modernizing its marketing through a content studio, expanded influencer use, new creative agencies and greater e-commerce capabilities.
The company said e-commerce accounts for more than 20% of human-food sales and 30% of pet-food sales, with e-commerce positions improving faster than brick-and-mortar performance in the first quarter. McNabb said General Mills is also preparing for agentic commerce by focusing on product discoverability, accurate information and ease of purchase.
On costs, management reiterated its target of $750 million in savings during fiscal 2027 and $3 billion in total savings by fiscal 2030, including $2 billion from HMM and $1 billion from transformation initiatives. The transformation work includes supply-chain, manufacturing-network and logistics efforts, as well as a new external packaging partner intended to improve the speed and efficiency of packaging innovation.
Bruce said net debt to EBITDA was “just a touch” above 4 times. General Mills aims to return to its 3 times target over at least the next couple of years, supported by cost savings and transformation efforts.
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.
