General Mills' Q3 2025 Earnings: A Mixed Bag

General Mills (GIS) reported its third-quarter 2025 earnings on March 19, 2025, and the results were a mixed bag. The consumer-food giant saw a 5% year-over-year decline in revenue to $4.8 billion, missing analysts' consensus estimates of $4.96 billion. Adjusted EPS fell to $1.00, a 15% decline year over year, but it beat the $0.96 expectation. The company's financial pressures were evident, leading to a downward revision in guidance for the remainder of the fiscal year.

The decline in revenue was primarily due to retailer inventory reductions, slow snack sales, and foreign currency challenges. The North America Retail segment experienced a 7% net sales drop, while the North America Pet segment saw a 20% decrease in operating profit. The International segment also faced a 4% sales decline, largely due to unfavorable currency impacts. Despite these losses, the North America Foodservice segment exhibited resilience, with sales ticking up by 1%.

The company's reported operating profit decreased to $891 million, down 2% year over year, while its adjusted operating profit dropped 12.4% in constant currency. The decrease in diluted EPS to $1.12 reflects these fiscal pressures, compounded by a higher effective tax rate.

In response to current market conditions, General Mills implemented the Holistic Margin Management (HMM) strategy, which yielded slight improvements in gross margin, up 40 basis points. However, rising input costs were an ongoing challenge. The external market environment, including inventory reductions by retailers in key segments, weighed heavily on performance.

Looking ahead, management acknowledged the impact of supply chain dynamics and committed to addressing these issues to stabilize future sales. Management's focus on cost reductions and strategic initiatives reflects an intention to improve financial stability in the coming quarters. General Mills revised its full-year guidance downward, predicting a 1.5% to 2% decline in organic net sales. It also expects a 7% to 8% decline in both adjusted operating profit and EPS. Management remains optimistic about its strategic initiatives, including targeted cost efficiencies, expected to reduce the cost of goods sold by 5% in fiscal 2026.

Investors should watch for updates on General Mills' ongoing investments in innovation and brand support. The company is poised to enhance its competitive edge through acquisitions, like the partial acquisition of premium pet food brands. As external pressures like commodity price volatility persist, the company’s risk management strategies in its supply chain and pricing will be key focal areas following upcoming earnings releases.

In conclusion, General Mills' Q3 2025 earnings report highlights the company's current financial pressures and strategic initiatives to address them. While the short-term outlook is challenging, the company's long-term prospects remain promising, given its strong brand equity and commitment to innovation. Investors should closely monitor General Mills' progress in implementing its strategic initiatives and managing external market pressures.