Financial Data and Key Metrics Changes - The company is experiencing significant changes in the food category and within its business, including the Yoplait divestiture and the Whitebridge acquisition [3][4] - Profit results in Q1 were expected to be pressured by increased investment and the impact from the yogurt divestiture [5][6] - The company reaffirmed its fiscal 2026 guidance, indicating confidence in its strategy despite current pressures [6] Business Line Data and Key Metrics Changes - The company has strengthened its pound share in eight of its top ten categories and is holding pound share in pet [5][6] - New product volumes are up 25%, with strong initiatives planned for Q2, particularly in fresh pet food and other categories [6][7] - The cereal business showed improvement with second consecutive quarter of pound share growth, particularly for Cheerios Protein and granola [20] Market Data and Key Metrics Changes - The North America Retail category is experiencing flat volume growth, which is about 50 basis points below historical averages [11][12] - The company noted a shipment timing headwind in the Pet segment, impacting total company pounds in the quarter [22] Company Strategy and Development Direction - The company is focused on returning to profitable organic growth as the best way to create shareholder value [3] - Significant investments are being made in innovation, new product news, and brand campaigns across all top categories [5] - The company is adjusting its pricing strategy to address consumer value perceptions and is confident in the effectiveness of these adjustments [35] Management's Comments on Operating Environment and Future Outlook - Management believes that the current volume environment is largely within the company's control, despite external pressures [11][12] - The company is optimistic about the early signs of improvement and plans to continue its positive momentum in food service and international markets [6][7] - Management acknowledged the impact of GLP-1 medications on consumer behavior but sees opportunities in meeting changing consumer demands [68][69] Other Important Information - The company is actively working on reformulating products to eliminate artificial dyes and is navigating regulatory challenges effectively [58][60] - The company is increasing its focus on new product innovation, with new products now accounting for approximately 5% of net sales, up from 3.5% [62] Q&A Session Summary Question: Insights on the volume environment and structural challenges - Management believes the volume environment is largely within their control, with current trends being slightly better than expected [11][12] Question: Path back to volume growth and reported volume decline - Management explained that while volume improved in top categories, declines in flour and desserts impacted overall volume [20] Question: Trends in dog food and pet treats - The core pet business held pound share, with positive growth in Blue Life Protection Formula and Tiki Cat, but challenges remain in the Wilderness brand [26][28] Question: Balance between scale and complexity in the portfolio - Management emphasized the importance of focusing on consumer needs and leveraging scale for better execution across categories [30][31] Question: Impact of price promotions and category performance - Management noted that price adjustments have been effective, with improvements seen in bars, fruit snacks, and salty snacks [35] Question: Household penetration gains and driving factors - Household penetration grew for the first time since fiscal 2022, driven by effective pricing and innovation in key categories [50][51] Question: Demand planning improvements and technology use - The company is leveraging AI for better forecasting, allowing marketing teams to focus on demand generation [52][53] Question: Efforts on reformulation and consumer concerns - The company is actively working to remove artificial dyes and is prepared to navigate state-level regulations [58][60] Question: Innovation contribution to sales - New products now account for about 5% of sales, with a focus on impactful innovations across all segments [62] Question: Clarification on operating profit expectations - Management confirmed expectations for operating profit to be down in Q2, similar to Q4 of the previous year [76][77] Question: Competition in the away-from-home channel - Management noted stable traffic in the away-from-home channel and emphasized the company's strong position in the non-commercial food service sector [80]

Financial Data and Key Metrics Changes - The company reported a profit performance in Q1 that was better than expected, with operating profit and EPS showing positive results due to lighter inflation phasing and trade expense timing benefits [43][44][46] - The overall volume reported was down by 1%, despite holding or gaining share in eight out of ten categories, primarily due to declines in flour and desserts [17][20] Business Line Data and Key Metrics Changes - The company saw improvements in volume for its top ten categories, with notable growth in refrigerated dough, fruit snacks, and salty snacks, while the cereal business showed second consecutive quarter of pound share growth [20][50] - New product volumes increased by 25%, with successful launches such as Cheerios Protein and Mott bars contributing to this growth [6][62] Market Data and Key Metrics Changes - The North America Retail segment's volume remained flat, with a slight decline in overall volume reported, attributed to specific categories like flour and desserts [11][17] - The pet food segment held its pound share, with positive growth in the Blue Buffalo Life Protection Formula and cat feeding business, although the Wilderness brand faced challenges [26][27] Company Strategy and Development Direction - The company is focused on returning to profitable organic growth as a primary strategy, emphasizing significant investments in innovation, new product launches, and brand campaigns [3][5] - The company plans to complete price adjustments across two-thirds of its portfolio to enhance competitiveness and drive value for consumers [36][37] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strategy and noted that early signs of improvement are encouraging, with expectations for better performance in the second half of the fiscal year [6][7] - The impact of GLP-1 medications on consumer behavior was acknowledged, with management noting opportunities to cater to changing consumer needs for higher protein products [10][70] Other Important Information - The company is transitioning to a focus on digital technology and AI for better demand forecasting, which is expected to enhance marketing effectiveness and operational efficiency [52][53] - The company is actively working on reformulating products to meet consumer demands for cleaner ingredient lists, with a commitment to eliminate artificial dyes by next summer [58][59] Q&A Session Summary Question: Insights on the volume environment and structural challenges - Management believes the volume environment is largely within their control, with recent pricing adjustments expected to improve volume share [10][11] Question: Path back to volume growth and category performance - Management expects volume growth to return by Q4, with current performance slightly below expectations due to specific category challenges [17][18] Question: Trends in the pet food segment - The pet food segment showed mixed results, with some brands performing well while others, like Wilderness, require improvement [25][26] Question: Impact of pricing adjustments on household penetration - The company saw household penetration grow for the first time since fiscal 2022, driven by effective pricing strategies and product innovation [49][50] Question: Innovation and product reformulation efforts - The company is increasing its focus on innovation, with new products now accounting for approximately 5% of sales, up from 3.5% [62][63] Question: Competitive landscape and away-from-home eating trends - Management noted that while competition in the away-from-home channel is increasing, the company is well-positioned to capture growth in non-commercial channels [80][81]

Financial Data and Key Metrics Changes - The company has experienced five years of strong growth through fiscal 2023, influenced by significant inflationary pressures [4] - The outlook for fiscal 2026 includes a focus on organic sales growth, with a long-term target of 2% to 3% [10][12] - The company reaffirmed its guidance for the year, indicating confidence in the progress made [9] Business Line Data and Key Metrics Changes - In North America Retail, the company is seeing pound share growth in eight of its ten categories, with seven categories showing improvement since Q4 [8] - The Pet business is expected to drive dollar share growth and overall growth, with significant product news planned [7][12] Market Data and Key Metrics Changes - The industry is facing a challenging environment with flat volume growth, attributed to consumer value sensitivity and inflation adjustments [21][25] - The company noted a shift in consumer behavior towards cooking from scratch, impacting certain product categories positively [23] Company Strategy and Development Direction - The company is focused on organic sales growth as the primary driver of long-term value creation, alongside modest portfolio shaping [5][12] - Investments are being made to address consumer needs for value, including price adjustments and innovation across product categories [6][7] - The company is launching into the fresh pet food category, anticipating significant growth potential in this segment [51][56] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the current operating environment is dynamic, with a focus on restoring volume-driven organic sales growth [10][20] - The company is optimistic about its ability to achieve mid-single-digit growth in the Pet segment, driven by product innovation and market positioning [66] Other Important Information - The company has made significant investments in digital capabilities, which are expected to enhance operational efficiency and consumer engagement [16][72] - A global transformation initiative is expected to generate an additional $100 million in cost savings, supporting growth initiatives [70] Q&A Session Summary Question: What gives you confidence in achieving the long-term growth rate? - Confidence stems from portfolio reshaping, brand focus through the Remarkable Experience framework, and investment in capabilities [11] Question: What are the main drivers of expected profitability decline? - Unusual factors include the divestiture of Yoplait and reset of incentive compensation, which are considered transitory [28] Question: How do you view the competitive landscape and your market share? - The company acknowledges past competitiveness issues and is focusing on improving product quality and advertising to regain market share [39] Question: What metrics will indicate success in the Fresh business? - Initial metrics will focus on trial, repeat purchases, and penetration within households [64] Question: What are the growth opportunities in the Pet segment? - The company sees significant growth potential in the Pet segment, particularly in the cat business and through new product innovations [66]

Financial Data and Key Metrics Changes - The company has experienced five years of strong growth through fiscal 2023, influenced by significant inflationary pressures [5] - The fiscal 2026 priorities focus on organic sales growth, with a long-term target of 2% to 3% growth [5][10] - The company expects a decline in operating profit of 10% to 15% for fiscal 2026, attributed to unusual factors such as the divestiture of Yoplait and reset of incentive compensation [25][26] Business Line Data and Key Metrics Changes - The North America retail business aims to restart volume-driven organic sales growth, with improvements seen in eight of ten categories [6][7] - The Pet business is focused on driving dollar share growth and has significant product news planned [6][10] - New product sales are expected to increase by 25% this year, with notable launches across major categories [35] Market Data and Key Metrics Changes - Industry volume recovery has been slower and more expensive than anticipated, with flat volume growth expected in the company's categories [16][17] - The company acknowledges a shift in consumer behavior towards value, impacting overall volume [18][19] - Despite challenges, there are growth opportunities in categories focused on health, bold flavors, and nostalgia [19] Company Strategy and Development Direction - The company is reshaping its portfolio towards growth orientation, having divested underperforming segments and acquired into fast-growing areas like pet food [10][11] - A focus on the "remarkable experience framework" aims to enhance brand competitiveness across key measures [12][34] - The company is investing in digital capabilities to improve efficiency and market positioning [13][61] Management's Comments on Operating Environment and Future Outlook - Management highlights the importance of addressing consumer value needs and the impact of inflation on purchasing behavior [5][18] - The company is optimistic about returning to mid-single-digit growth in the pet segment and leveraging new product innovations [56] - Management emphasizes the need for responsible investment to support organic sales growth while managing profitability [25][27] Other Important Information - The company plans to launch into the fresh pet food category, projecting significant growth potential in this $3 billion segment [43] - The fresh segment is expected to grow to $10 billion within the next decade, with a focus on leveraging the Blue Buffalo brand [43][44] - The company is committed to maintaining strong in-store presence and national advertising for the fresh product launch [46] Q&A Session Summary Question: What gives you confidence in achieving your long-term growth targets? - Confidence stems from portfolio reshaping, brand focus, and investment in capabilities [10] Question: What are the main drivers of the expected decline in profitability? - The decline is influenced by the Yoplait divestiture and reset of incentive compensation, which are seen as transitory factors [26] Question: How do you view the competitive landscape and your positioning? - The company acknowledges past competitiveness issues and is focused on improving product quality and advertising [34] Question: What metrics will indicate success in the fresh pet food segment? - Initial metrics will focus on trial, repeat purchases, and penetration within households [53]

Financial Data and Key Metrics Changes - The company has experienced five years of strong growth through fiscal 2023, influenced by significant inflationary pressures [5] - The fiscal 2026 priorities focus on organic sales growth, with a target of 2% to 3% long-term growth [10][12] - The company reaffirmed its guidance for the year, indicating confidence in its strategies despite current challenges [9] Business Line Data and Key Metrics Changes - The North America Retail business is focused on restarting volume-driven organic sales growth and driving dollar share growth in the Pet business [5][6] - The company reported pound share growth in eight of its ten categories in North America Retail, with seven categories showing improvement since Q4 [8] Market Data and Key Metrics Changes - The industry is facing a flat volume growth, with expectations of 0.5% growth aligning with population growth [20] - The company noted a shift in consumer behavior towards cooking from scratch due to value concerns, impacting volume trends [22][24] Company Strategy and Development Direction - The company is reshaping its portfolio towards growth-oriented categories, having divested underperforming segments [12] - The focus is on enhancing brand performance through the Remarkable Experience framework, which emphasizes product quality, packaging, and price value [13][14] - Significant investments in digital capabilities and e-commerce are being made, with e-commerce sales now representing 18% of total sales [16] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by inflation and consumer value consciousness, which have affected volume recovery [19][24] - The company is optimistic about growth opportunities in categories focused on health and nostalgia, which are currently trending positively [25] Other Important Information - The company is launching into the fresh pet food category, leveraging learnings from previous tests to ensure a successful entry [47][52] - The Fresh segment is projected to grow significantly, with the company aiming to capture a fair share of this market [52] Q&A Session Summary Question: What gives confidence in achieving long-term growth targets? - Confidence stems from portfolio reshaping, brand focus, and investment in capabilities [12][13] Question: What are the main drivers of expected profitability decline? - Unusual factors include the divestiture of Yoplait and reset of incentive compensation, which are seen as transitory [28][30] Question: How is the company addressing competitiveness issues? - The company is investing in product quality, advertising, and adjusting pricing strategies to improve competitiveness [39][40] Question: What metrics will be tracked for the Fresh business? - Initial metrics include trial, repeat, and penetration rates to gauge success [64] Question: What is the long-term growth potential for the Pet segment? - The company aims for mid-single-digit growth in the Pet segment, focusing on product superiority and market expansion [66]

Financial Data and Key Metrics Changes - For fiscal year 2025, organic net sales decreased by 2%, adjusted operating profit and adjusted diluted EPS were down 7% in constant currency, reflecting a decision to increase investments in response to consumer behavior changes [4][46] - The fourth quarter reported net sales were $4.6 billion, down 3%, with organic net sales also down 3% from the prior year [34][46] - Adjusted operating profit for the fourth quarter was $622 million, down 22% in constant currency, and adjusted diluted EPS totaled $0.74, down 27% in constant currency [35][46] Business Line Data and Key Metrics Changes - North America Retail's fourth quarter organic net sales were down 7%, lagging Nielsen measured U.S. retail sales by approximately three points [37] - North America Pet segment saw a 3% increase in organic net sales driven by higher volume, with reported net sales up double digits for wet food and treats [39] - North America Foodservice organic net sales decreased by 1% in the quarter, while full year organic net sales grew by 2% [42] - International segment posted a 9% increase in fourth quarter organic net sales, driven by strong growth in Brazil and distributor markets [43] Market Data and Key Metrics Changes - North America Retail faced challenges due to value-seeking consumer behavior and weaker sentiment, particularly impacting sales trends [5][6] - The International segment experienced modest organic net sales growth, with declines in China offset by growth in other markets [44] Company Strategy and Development Direction - The company aims to restore volume-driven organic sales growth by investing in product innovation, packaging, and consumer value [3][11] - Plans for fiscal 2026 include maintaining a balance of reinvesting for long-term growth while driving cost savings [12][28] - The company is focusing on enhancing brand remarkability through a structured framework assessing product, packaging, communication, and value [12][15] Management's Comments on Operating Environment and Future Outlook - Management anticipates a volatile operating environment with consumers remaining cautious due to economic uncertainties [10][11] - The company expects to face headwinds from input cost inflation and tariffs, but plans to mitigate these through strategic actions [50][51] - For fiscal 2026, organic net sales are expected to range between down 1% and up 1%, with adjusted operating profit projected to decline by 10% to 15% in constant currency [53] Other Important Information - The company returned $2.5 billion to shareholders through dividends and net share repurchases in fiscal 2025 [10][48] - A global transformation initiative is expected to generate $100 million in cost savings, which will be reinvested in growth [31][33] Q&A Session Summary Question: What are the expectations for organic sales growth in fiscal 2026? - The company expects organic sales growth to improve, driven by stronger competitiveness and investments in product innovation [49][53] Question: How is the company addressing input cost inflation? - The company is working to mitigate impacts through product reformulation and ingredient substitution while planning for significant investments in value and innovation [50][51] Question: What are the plans for the North America Pet business? - The company plans to accelerate growth in the North America Pet segment by expanding the Blue Buffalo portfolio and launching new products [22][24]

Financial Data and Key Metrics Changes - For fiscal year 2025, organic net sales decreased by 2%, adjusted operating profit and adjusted diluted EPS were down 7% in constant currency [4][42] - Fourth quarter reported net sales were $4.6 billion, down 3%, with organic net sales also down 3% from the prior year [30][42] - Adjusted operating profit for the fourth quarter was $622 million, down 22% in constant currency, and adjusted diluted EPS totaled $0.74, down 27% in constant currency [31][42] Business Line Data and Key Metrics Changes - North America Retail's fourth quarter organic net sales were down 7%, with operating profit down 29% in constant currency [33][34] - North America Pet segment saw a 3% increase in organic net sales driven by higher volume, while operating profit was down 3% in constant currency [35][36] - North America Foodservice organic net sales decreased by 1% in the quarter, but operating profit increased by 5% in constant currency [38][39] - International segment organic net sales increased by 9% in the fourth quarter, driven by strong growth in Brazil and distributor markets [40] Market Data and Key Metrics Changes - North America Retail's sales trends lagged Nielsen measured U.S. retail sales by approximately three points, primarily due to trade expense timing headwinds [33] - The International segment's net sales growth was partially offset by declines in China, but 59% of priority businesses grew or held share for the full year [40] Company Strategy and Development Direction - The company aims to restore volume-driven organic sales growth by investing in consumer value, product news, innovation, and brand building [3][51] - Key priorities for fiscal year 2026 include returning North America Retail to volume growth, accelerating North America Pet growth, and driving efficiency to fund these investments [10][20] - The company plans to leverage its Remarkable Experience framework to assess brands and tailor investments accordingly [11][12] Management's Comments on Operating Environment and Future Outlook - Management expects the operating environment to remain volatile, with consumers continuing to seek value amid widespread uncertainty [9][10] - For fiscal year 2026, organic net sales are expected to range between down 1% and up 1%, with adjusted operating profit and diluted EPS expected to decline by 10% to 15% in constant currency [49][50] Other Important Information - The company returned $2.5 billion to shareholders through dividends and net share repurchases in fiscal year 2025 [9][44] - A global transformation initiative is expected to generate $100 million in cost savings, which will be reinvested in growth [29] Q&A Session Summary Question: What are the expectations for organic sales growth in fiscal year 2026? - The company expects organic sales growth to improve in fiscal year 2026, driven by stronger competitiveness in response to investments in Remarkability [45][49] Question: How will the company address input cost inflation and tariffs? - The company anticipates input cost inflation of roughly 3% and a potential additional risk of 1% to 2% from tariffs, but is working to mitigate these impacts through various strategies [46][47] Question: What are the plans for the North America Pet business? - The company plans to accelerate growth in the North America Pet business by investing in core Blue Buffalo lines and expanding into new fast-growing spaces [20][21]

Summary of General Mills (GIS) 2025 Conference Call Company Overview - **Company**: General Mills (GIS) - **Date**: June 05, 2025 - **Key Speaker**: Jeff Harmening, Chairman and CEO Industry Insights Consumer Sentiment - **US Consumer Sentiment**: Currently at its second lowest level ever recorded by the University of Michigan, only higher than the pandemic's onset in 2020 [6][7] - **Financial Stress**: US consumers are financially stressed but still purchasing, with a notable increase in consumer debt [7] - **Eating Habits**: 87% of eating occasions in the US occur at home, benefiting General Mills' product categories [8] - **Consumer Preferences**: Increased demand for protein, bold flavors, and nostalgic products during tough economic times [9][10][12] Regional Performance - **Europe**: Consumer sentiment is less stressed than in the US, with growth in categories like ice cream and Nature Valley [13][14] - **China**: Similar stress levels as the US, with a decline in traffic at Haagen Dazs shops but growth in retail [15][16] - **Brazil**: Experiencing growth, indicating a healthier economic environment [15] Strategic Initiatives Accelerate Strategy - **Portfolio Reshaping**: 30% reshaping over the last seven years through acquisitions and divestitures, including a recent divestiture of yogurt in the US [22][23] - **Investment in Technology**: Focus on data and technology to enhance strategic revenue management and supply chain digitization, improving productivity savings from 4% to 5% [24] Marketing and Innovation - **Investment Focus**: Emphasis on organic growth, with significant investments in marketing and new product innovation for fiscal 2026 [27][35] - **Remarkable Experience Framework**: A disciplined approach to evaluate product performance against competitors, focusing on value, packaging, and communication [63][64] Financial Performance Sales and Volume Trends - **Pound Volume Improvement**: 65% of categories improved in the fourth quarter, with a decrease in pounds down to 1% from 3% earlier in the year [33][40] - **Dollar Sales Lag**: Dollar sales down 4%, expected to lag behind volume improvements due to pricing adjustments [34][42] Pet Food Segment - **Growth in Pet Food**: Successful acquisitions like Blue Buffalo and Tiki Cat, with a focus on the humanization trend in pet food [45][50] - **Advertising Improvements**: Enhanced advertising strategies leading to growth in specific pet food categories [47][48] Food Service Business - **Growth and Profitability**: Food service business growing at 3% top line and 15% profitability, with strong margins due to competitive R&D capabilities [53][56] - **Noncommercial Channels**: 60% of food service business in noncommercial channels, which are growing despite challenges in the restaurant sector [57] Challenges and Regulatory Environment Tariffs and Inflation - **Tariff Impact**: Limited exposure due to 97% of products made in the US, with some raw materials sourced internationally [95][96] - **Inflation Management**: Tariffs viewed as an addition to short-term inflation, manageable through productivity [98] Food Regulation - **Engagement with Government**: Active dialogue with federal authorities on food regulation, particularly regarding artificial colors [100][102] - **Competitive Advantage**: Strong R&D capabilities position General Mills favorably in adapting to regulatory changes [102] Future Outlook Key Building Blocks for Fiscal 2026 - **Focus on Organic Growth**: Priority on returning to organic growth through investments in value, marketing, and innovation [105][106] - **Productivity Goals**: Expected 5% productivity savings and additional savings from restructuring initiatives [108][89] - **Divestiture Impact**: Anticipated effects of the Yoplait divestiture on earnings and overall strategy [110] Conclusion - **Encouraging Trends**: Positive indicators in pound volume and household penetration, with confidence in the effectiveness of investments made [112]

Industry Overview - The natural foods industry has transitioned from a niche market to a mainstream sector due to increased health consciousness and environmental awareness among consumers [2] - There is a growing focus on clean eating, sustainability, and ethical sourcing, leading to rapid popularity of natural and organic food products [2] - Consumers are favoring transparency in sourcing and minimal processing, with a preference for organic, non-GMO, and preservative-free options [3] Market Dynamics - Governments worldwide are promoting clean eating and implementing stricter food labeling regulations, which is driving market expansion [3] - Natural food companies are experiencing stronger brand loyalty and the ability to command premium pricing as a result of these trends [3] - The global healthy foods market is projected to reach $2.26 trillion by 2035, indicating significant growth potential [5] Key Players - Companies like The Hain Celestial Group, Inc. and Vital Farms, Inc. are responding to the rising demand for organic and ethically sourced foods [4] - Sprouts Farmers Market, Inc. has seen substantial growth in a market estimated at approximately $290 billion, focusing on high-quality and ethically sourced products [7] - United Natural Foods, Inc. is one of the largest distributors of organic and natural products in North America, with a strategic shift to focus on natural, organic, specialty, and fresh products [10][11] Innovations and Strategies - Companies are investing in plant-based alternatives, functional foods, and sustainable farming technologies to meet evolving consumer preferences [5] - Sprouts Farmers Market has launched a new loyalty program and is self-distributing fresh meat and seafood to enhance customer experience and supply chain efficiency [8][9] - Beyond Meat is focusing on clean-label credentials and health-forward innovation, with product launches like Beyond Chicken Pieces and reformulated Beyond Burger [14][15] Future Outlook - The natural foods industry is expected to continue evolving with ongoing innovation and expanding product categories [5] - General Mills is strategically positioning itself in the natural and organic food space, with a focus on fewer but larger innovations targeting high-protein and sustainable foods [16][17] - Companies are refining existing products and adjusting marketing strategies to better meet consumer demands for natural ingredients and organic options [18][19]

Financial Data and Key Metrics Changes - The company is focusing on accelerating organic growth with a target of at least 5% HMM savings and an additional $100 million in cost savings planned for fiscal 2026 [5][16] - Consumer confidence indices indicate that consumer confidence is currently below levels seen three months ago and is comparable to 2008 [8][9] - The company expects to improve competitiveness starting in the fourth quarter with actions taken [17] Business Line Data and Key Metrics Changes - The company is stepping up investment in pricing and marketing, particularly in the fruit snacks area, where consumers are seeking value [13][14] - New product innovations are being emphasized, with a focus on fewer but bigger innovations planned for the first half of next year [32][33] - The fruit snacks category is currently down, and the company is working on improving its market share through better pricing and marketing strategies [60][61] Market Data and Key Metrics Changes - The snacks business is experiencing a negative gap in performance compared to previous years, attributed to decreased consumer confidence and increased value-seeking behavior [49][55] - The company notes that food-at-home consumption has increased to 87% of occasions, which is higher than pre-pandemic levels [52] - The pet food segment is facing a 5-point drag from retail inventory, particularly in dry pet food [98][99] Company Strategy and Development Direction - The company aims to reinvest savings from HMM and the 53rd week to drive growth and improve competitiveness [16][82] - There is a commitment to enhancing marketing efforts and new product innovation to align with consumer preferences [85][86] - The strategy includes a holistic approach to value, focusing on marketing, innovation, and pricing [84] Management's Comments on Operating Environment and Future Outlook - Management acknowledges that the consumer environment has not improved as expected, with consumers increasingly seeking value [7][8] - The company is optimistic about returning to growth, particularly in the cereal and soup categories, due to increased marketing and improved product offerings [93][94] - Management emphasizes the importance of understanding consumer needs and adapting to changing market conditions [45][72] Other Important Information - The company is experiencing challenges in the cereal category, with a mid-single-digit decline in U.S. retail sales [89] - There is a focus on improving the marketing and innovation of core products to regain market share [80][81] Q&A Session Summary Question: What is the incremental investment needed for fiscal 2026? - Management indicated that the consumer environment has not improved as expected, and they are focusing on value and marketing to drive growth [7][8] Question: What are the tailwinds and headwinds for next year? - Management identified tailwinds such as better marketing and innovation, while headwinds include increased trade and competitive pressures [19][20] Question: How is the company addressing innovation in the food space? - Management noted that new product innovation is increasing but still lags behind pre-pandemic levels, with plans to support successful innovations more robustly [30][31] Question: What is the strategy for the snacks business? - The company is focusing on value adjustments and marketing improvements to enhance the performance of its snacks portfolio [60][61] Question: How does the company assess consumer willingness to pay for healthier ingredients? - Management believes that consumers are still willing to pay for quality, but value perception is critical in the current environment [70][71]