General Mills is slowly righting its ship, with retail sales momentum building after the company lowered prices to appeal to inflation-weary shoppers, and increased innovation and renovation to deliver the benefits increasingly health-conscious consumers want, executives said Wednesday.
While CEO Jeff Harmening acknowledged during an investor call Sept. 23 that the cereal giant has “more work to do,” he also said the company’s “remarkability playbook is working – driving improved topline performance by delivering stronger product innovation and renovation focused on the benefits consumers are looking for today.”
In the company’s first quarter, which ended Aug. 30, the company’s organic net sales were flat compared to last year, while adjusted operating profit fell 11% and adjusted diluted EPS declined 13%.
In isolation, these results may appear grim, but Harmening said “these results finished ahead of our expectations, driven largely by improved retail sales trends in North America Retail, North America Foodservice and International, as well as a good start on our cost savings program”.
CFO Kofi Bruce added General Mills’ Q1 retail sales in North America improved by about 2 percentage points versus the fourth quarter of fiscal year 2026, while North American foodservice organic net sales increased 4% year-over-year, thanks in part to strong cereal and frozen meal performance in schools, lodging and recreation. Organic net sales also were bolstered by a 4% increase in international markets, including India and China.
Based on these results, the company reaffirmed its full-year fiscal 2027 guidance, including expected organic net sales between negative 1.5% to positive 0.5%, adjusted operating profit declining 8% to 13% and adjusted earnings per share between $3 and $3.20.
Innovation builds on foundation laid by price cuts
While General Mills executives acknowledge the company has a lot of work to do to return to black, they say they are eager to build on momentum that began last year that included price cuts to entice back inflation-weary consumers.
“We entered fiscal ’27 with a stronger foundation due to the decisive action we took last year to bring more value to consumers by adjusting base prices to address key price cliffs and gaps,” said Chief Operating Officer Dana McNabb.
“With that investment behind us, our full focus this year is on accelerating our pace of product innovation and renovation to deliver more of the lasting benefits that consumers are looking for today,” she explained.
“This includes more protein and fiber, cleaner labels, bold flavors, fun and indulgence and pet humanization,” she said.
For example, the company’s launch of Honey Nut Cheerios Protein helped build out the company’s portfolio of protein cereals, which generated about $200 million in retail sales and is growing double-digits across Cheerios, Nature Valley and Ghost brands.
Under the Pillsbury brand, the company has “improved brand remarkability” by renovating 70% of its canned dough line in Q1 with “more cinnamon, more icing and more flakiness,” which McNabb said was paired with a “compelling new brand campaign.”
As a result, the company stabilized the brand’s retail sales for the first time after eight consecutive quarters of declines, McNabb said. It also is growing household penetration.
Finally, the company halved the volume declines suffered by its snack brand Totino’s “thanks to sharper merchandising execution, brand support and innovation,” including new Blasted rolls and strong performance by the Ultimate Pizza rolls, she said, adding that new product renovation coming later this year should “accelerate our path back to growth.”
Enhanced marketing reinforces innovation and renovation
Beyond better nutrition, General Mills is bolstering its business with stepped-up marketing, including new agency partners, a “next-generation content studio” and by “doubling our use of influencers to maximize our reach and engagement,” McNabb said.
For example, she said, General Mills is “creating viral moments with Lucky Charms on college campuses, modernizing the Reese’s Puffs rap with GloRilla and collaborating with KPop Demon Hunters on Cinnamon Toast Crunch and Lucky Charms.”
These efforts helped boost household penetration and drive low-single digit retail sales growth across the brands in the quarter.
Even as the company turns its attention to brand building and product development to drive sales, it continues to explore affordability, including offering cups and smaller boxes to lower entry price points and “innovating with tubs and other large formats to offer an attractive price per ounce for larger households,” McNabb said.
Reflecting on these gains despite ongoing challenges, including a difficult economy, Harmening reiterated his confidence in General Mills’ strategy.
“Our remarkability playbook is working, our investments to accelerate innovation and renovation are delivering as expected and we are adapting our cost structure to navigate volatility,” he said. “We are confident we can deliver our financial commitments and capital allocation priorities this year.”
