General Mills (NYSE: GIS) has issued a cautionary forecast for its current fiscal year, highlighting weak category sales growth and a decline in income as the company navigates challenges from tariff-related cost pressures.
The packaged foods leader, known for brands like Cheerios and Chex, is feeling the impact of consumers tightening their budgets amid ongoing economic uncertainty tied to broad U.S. tariff policies.
In a statement released Wednesday, General Mills noted it expects “less benefit” from pricing actions due to the “continued challenging consumer backdrop.” The company also projected that category growth for fiscal 2026 will fall “below its long-term expectations.”
Despite these hurdles, General Mills plans to make “significant strategic investments” in its fresh pet food segment in the U.S., alongside increased spending on consumer value initiatives, innovation, and brand development. However, these investments, combined with tariff-driven inflation in input costs and a restructuring of corporate incentives, are expected to outweigh cost savings and the benefit of an additional week in the fiscal calendar.
The company also cited its recent divestment of yogurt businesses in the U.S. and Canada, as well as the acquisition of North American Whitebridge Pet Brands, which are anticipated to reduce adjusted operating profit growth by about five percentage points.
Given the current landscape, General Mills forecasts organic net sales to remain mostly flat, ranging from a 1% decline to a 1% increase. Adjusted operating profit is expected to decrease by 10% to 15% on a constant currency basis, down from $3.4 billion last year.
In the fourth quarter, net sales dropped 3.3% year-over-year to $4.56 billion, slightly below Bloomberg’s consensus estimate of $4.59 billion. Adjusted earnings per share beat estimates, coming in at $0.74 versus the expected $0.71.
Following the earnings report, General Mills shares slipped more than 1% in premarket trading.