The American food conglomerate General Mills is navigating a cautious consumer environment by implementing strategic price reductions. While this move is designed to stimulate long-term sales volume, it has come at a significant short-term cost, severely impacting the company’s third-quarter earnings. The resulting profit decline has prompted several Wall Street analysts to revise their price targets downward for the company’s stock.
Earnings and Revenue Decline
For the recent quarter, General Mills reported a currency-adjusted adjusted earnings per share of $0.64, marking a steep 37% drop. Net sales also contracted, falling 8% to $4.4 billion. This performance was primarily driven by weakness in the North American retail and foodservice sectors, the company’s home market. Although the international and pet food segments posted growth, their gains were insufficient to offset the domestic losses. Investors reacted negatively to the news, sending the share price to a new 52-week low of 32.99 euros in yesterday’s trading session.
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Margin Pressure and Analyst Revisions
The company’s adjusted gross margin fell by 280 basis points to 30.6%. Management attributed this compression to higher input costs and deliberate investments in both lower selling prices and brand marketing. The leadership is consciously accepting these near-term profitability hits with the goal of boosting sales volumes in the upcoming quarter. Citing persistent high selling, general, and administrative expenses, multiple investment banks have updated their outlooks:
- BofA Securities: Lowered price target from $48 to $42 (Neutral rating)
- Jefferies: Reduced price target from $42 to $37 (Hold rating)
Portfolio Restructuring Continues
Despite missing quarterly expectations, the management team reaffirmed its full fiscal 2026 outlook, which continues to project a decline in both organic net sales and adjusted operating profit. Concurrently, General Mills is advancing the restructuring of its brand portfolio. The sale of its Brazilian business, which includes the Yoki and Kitano brands, to 3corações is intended to free up resources. This divestiture allows the corporation to sharpen its focus on more profitable, global growth platforms moving forward.
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