Financial Data and Key Metrics Changes - The company reported improvement in organic sales and Holistic Margin Management, with a focus on transformation initiatives [4][5] - Pricing adjustments have been effective, with over 90% of pricing actions performing as expected [5][19] - The company anticipates profit growth in the fourth quarter, aided by favorable trade timing and the 53rd week [9][61] Business Line Data and Key Metrics Changes - North America Retail has shown growth in volume share across eight of the top ten categories, with a focus on the Remarkability Framework [6][14] - The North America Pet segment has gained share in core products, with the Life Protection Formula performing well [6][8] - The Love Made Fresh initiative has reached approximately 5% market share among early customers, with strong consumer ratings [7][8] Market Data and Key Metrics Changes - The pet category overall grew about 1% in Q2, with dog feeding lagging behind due to shifts in consumer behavior [32] - The cereal category remains under pressure, with a decline of about 3%, but there are signs of improvement in specific products like Cheerios [70] Company Strategy and Development Direction - The company aims to maintain momentum in organic sales and profitability through strategic pricing and product innovation [4][9] - There is a focus on enhancing the Remarkability Framework across all business lines to drive growth [30][39] - The company is monitoring competitive pricing strategies and believes it is well-positioned against competitors [18][19] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the second half of the fiscal year, expecting continued improvement in sales and profitability [28][29] - The operating environment remains volatile, with potential impacts from government actions and consumer sentiment [66] - Management is confident in the ability to deliver transformation savings and maintain competitive pricing [76] Other Important Information - The company has completed pricing adjustments on two-thirds of its portfolio, with positive responses in most categories [74] - There is ongoing work to improve the performance of the Wilderness brand, with new product launches planned [78] Q&A Session Summary Question: Sustainability of volume growth in North America Retail - Management acknowledged some shipment timing benefits but remains optimistic about continued category improvement [12][14] Question: Competitive environment and pricing strategies - Management noted that discounting levels have remained stable and emphasized the importance of effective execution in pricing [16][18] Question: Expectations for fiscal 3Q and 4Q - Management expects improvements in price mix and volume growth, but cautioned about potential volatility [25][29] Question: Impact of Love Made Fresh on base business - Management indicated it is too early to assess the impact of Love Made Fresh on the core business [58][60] Question: Inflation and cost of goods sold outlook - Management reaffirmed guidance for base inflation around 3% and noted minimal tariff impacts [51][52] Question: Performance of the pet category - Management reported that the dog feeding segment is lagging, but long-term growth is expected due to trends in humanization [32][33] Question: Effectiveness of pricing investments - Management reported a high success rate in pricing adjustments, with ongoing monitoring of performance [74][76] Question: Channel shifts in pet purchases - E-commerce is identified as a growing channel for pet purchases, reflecting consumer behavior changes [90]

General Mills (NYSE:GIS) Q2 2026 Earnings Call December 17, 2025 09:00 AM ET Company ParticipantsJohn Baumgartner - Managing Director, Equity Research of Food and Healthy LivingAndrew Lazar - Managing DirectorMatthew Smith - Managing DirectorPeter Galbo - Director, Head of US Consumer Staples Equity ResearchDana McNabb - Group President of North America Retail and North America PetJeff Harmening - Chairman and CEOJeff Siemon - VP of Investor Relations and Corporate FinanceMegan Clapp - Equity ResearchKofi B ...

Financial Data and Key Metrics Changes - The company reported continued improvement in organic sales and effective execution of its transformation initiatives, particularly in North America Retail [3][4] - Pricing actions have been successful, with over 90% of the pricing strategies implemented performing as well or better than expected [4][17] - The company anticipates profit growth in the fourth quarter, aided by favorable trade timing and the addition of a 53rd week [8] Business Line Data and Key Metrics Changes - North America Retail has shown growth in volume share across eight of the top ten categories, with a focus on strategic pricing adjustments [3][5] - The North America Pet segment has gained share in its core business, with mid-single-digit growth in the cat category and positive momentum in the treats business [5][6] - The Love Made Fresh initiative has reached approximately 5% market share among early customers, with plans to expand distribution [6][7] Market Data and Key Metrics Changes - The pet category overall grew about 1% in Q2, with dog feeding lagging behind due to shifts in consumer behavior and preferences [25][27] - The cereal category remains under pressure, with a decline of about 3%, as consumers shift towards high-protein alternatives [61][62] Company Strategy and Development Direction - The company aims to maintain momentum in organic sales while focusing on profitability improvements in the second half of the fiscal year [8] - The Remarkability Framework is central to the company's strategy, emphasizing pricing, product innovation, and marketing effectiveness [4][16] - The company is confident in its competitive positioning and plans to continue leveraging its pricing strategies without resorting to deep discounting [15][17] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the sustainability of volume growth in North America Retail, despite some shipment timing benefits [13] - The competitive environment remains rational, with no significant increase in discounting levels observed [15][16] - The company is cautious about the volatile environment, including potential impacts from government actions and consumer sentiment [21][58] Other Important Information - The company has maintained its annual guidance despite ongoing volatility in the sector, indicating confidence in its ability to navigate challenges [58] - The transformation initiatives are expected to deliver savings above 4% in the coming year, contributing to overall profitability [68] Q&A Session Summary Question: Sustainability of volume growth in North America Retail - Management acknowledged some shipment timing benefits but remains optimistic about continued category improvement and competitiveness in the second half [13] Question: Competitive environment and pricing strategies - Management noted that discounting levels have not increased significantly and emphasized the importance of executing pricing strategies effectively [15][16] Question: Expectations for fiscal 3Q and 4Q - Management indicated that while there may be a trade-off between Q3 and Q4 performance, they expect overall improvement in organic sales [22] Question: Consumer behavior in the pet category - Management highlighted a shift towards e-commerce for pet purchases and noted that the dog feeding segment continues to lag behind [80] Question: Impact of pricing investments on volume - Management reported that nearly 90% of pricing investments have met or exceeded expectations, with ongoing monitoring of performance [31][66] Question: Inflation and cost of goods sold outlook - Management reaffirmed guidance of approximately 3% base inflation, with additional tariff headwinds expected [41][42] Question: Performance of the Wilderness brand - Management acknowledged underperformance in the Wilderness brand and outlined plans for new product launches and improved marketing strategies [70]

Financial Performance - Q2 Fiscal Year 2026 - Net sales decreased by 7% to $4.861 billion, while organic net sales decreased by 1%[80] - Adjusted operating profit decreased by 20% to $848 million[80] - Adjusted diluted EPS decreased by 21% to $1.10[80] - Adjusted gross margin decreased from 36.3% to 34.8%[103] Segment Performance - Q2 Fiscal Year 2026 - North America Retail organic net sales decreased by 3%[87] - North America Pet organic net sales increased by 1%[89] - North America Foodservice organic net sales was flat[92] - International organic net sales increased by 4%[94] Fiscal Year 2026 Outlook - The company reaffirmed its fiscal year 2026 outlook, including organic net sales growth of -1% to +1%[10, 75] - Adjusted operating profit growth of -15% to -10%[75] - Adjusted diluted EPS growth of -15% to -10%[75]

Financial Data and Key Metrics Changes - Reported net sales for Q2 were $4.9 billion, down 7%, with a 6-point headwind from divestitures and acquisitions; organic net sales were down 1% [24] - Adjusted operating profit was $848 million, down 20% in constant currency, primarily due to lower volume and higher input costs [25] - Adjusted diluted earnings per share totaled $1.10, down 21% in constant currency [25] Business Line Data and Key Metrics Changes - North America Retail organic net sales were down 3%, driven by unfavorable price mix, but organic volume growth modestly outpaced Nielsen measured retail volume growth [26] - North America Pet segment net sales were up 11%, with organic net sales up 1%, driven by favorable price mix [27] - North America Foodservice organic net sales were flat, with growth in frozen baked goods and cereal offset by a decline in bakery flour [28] - International segment organic net sales were up 4%, driven by growth in Brazil, China, India, and North Asia [29] Market Data and Key Metrics Changes - In North America Retail, the company held or grew pound share in eight of its top 10 U.S. categories, with Nielsen measured pounds up 1% in Q2 [8][26] - The North America Pet segment saw mid-single-digit growth in cat feeding, while dog feeding results were mixed [16][27] - Internationally, dollar share was held or grown in 54% of priority businesses, led by Häagen-Dazs and Nature Valley [29] Company Strategy and Development Direction - The company is focused on strengthening brand remarkability to restore organic sales growth, with investments in product innovation and brand building [3][4] - Key priorities include returning North America retail to volume growth, accelerating North America pet growth, and driving efficiencies to fund these investments [5][6] - The Remarkable Experience Framework guides brand investment decisions, focusing on product, packaging, brand communications, omnichannel execution, and value [6][10] Management's Comments on Operating Environment and Future Outlook - Management noted a change in consumer behavior, with lower and middle-income consumers increasingly making food purchases on promotion due to economic pressures [9] - The company expects to drive further improvement in organic sales growth in the second half of fiscal 2026, reaffirming its fiscal guidance [4][33] - Management anticipates Q3 operating profit to be down more than previously expected, but expects strong profit growth in Q4 [33] Other Important Information - The adjusted gross margin was 34.8% of net sales, down 150 basis points year-over-year, primarily due to higher input costs [30] - The company plans to launch several new products in the second half of fiscal 2026, focusing on consumer trends such as better-for-you benefits and bold flavors [13][15] Q&A Session Summary Question: What are the expectations for organic net sales in the second half of fiscal 2026? - The company expects improved organic net sales driven by the expanded impact of remarkability investments and trade timing benefits in Q4 [33] Question: How is the company addressing the challenges in the North America retail segment? - The company is focused on delivering more value to consumers and amplifying elements of the remarkability framework to improve competitiveness [10] Question: What are the growth prospects for the North America pet segment? - The company is confident in its plans for the North America pet segment, expecting further acceleration in organic sales growth in the second half of fiscal 2026 [18]

Financial Data and Key Metrics Changes - Reported net sales for Q2 were $4.9 billion, down 7%, with a 6-point headwind from divestitures and acquisitions; organic net sales were down 1% [24] - Adjusted operating profit was $848 million, down 20% in constant currency, primarily due to lower volume and higher input costs [25] - Adjusted diluted earnings per share totaled $1.10, down 21% in constant currency [25] Business Line Data and Key Metrics Changes - North America Retail organic net sales were down 3%, driven by unfavorable price mix, but organic volume growth modestly outpaced Nielsen measured retail volume growth [26] - North America Pet segment net sales were up 11%, with organic net sales up 1%, driven by favorable price mix [27] - North America Foodservice organic net sales were flat, with growth in frozen baked goods and cereal offset by a decline in bakery flour [28] - International segment organic net sales were up 4%, driven by growth in Brazil, China, India, and North Asia [29] Market Data and Key Metrics Changes - In North America Retail, the company held or grew pound share in eight of its top 10 U.S. categories, with Nielsen measured pounds up 1% in Q2 [8][26] - The North America Pet segment saw mid-single-digit growth in cat feeding, while dog feeding results were mixed [16][27] - The international business held or grew dollar share in 54% of priority businesses, led by Häagen-Dazs and Nature Valley [29] Company Strategy and Development Direction - The company is focused on investing to strengthen brand remarkability to restore organic sales growth [3] - Key priorities include returning North America Retail to volume growth, accelerating North America Pet growth, and driving efficiencies to fund investments [5][6] - The Remarkable Experience Framework guides brand investment decisions, focusing on product, packaging, brand communications, omnichannel execution, and value [6][10] Management's Comments on Operating Environment and Future Outlook - Management noted a change in consumer behavior, with lower and middle-income consumers making more purchases on promotion due to economic pressures [9] - The company expects to drive further improvement in organic sales growth in the second half of fiscal 2026, reaffirming its fiscal guidance [4][33] - Management anticipates Q3 operating profit to be down more than previously expected, but expects strong profit growth in Q4 [33] Other Important Information - The adjusted gross margin was 34.8% of net sales, down 150 basis points due to higher input costs [30] - The adjusted effective tax rate was 23.3%, up from 20.1% a year ago, due to unfavorable earnings mix [31] - Capital investments in the first half totaled $253 million, with $659 million paid in dividends [32] Q&A Session Summary Question: What are the expectations for organic net sales in the second half? - The company expects improved organic net sales in the second half, driven by the expanded impact of remarkability investments [33] Question: How is the company addressing the challenges in the North America Retail segment? - The company is focused on returning North America Retail to volume growth by investing in remarkable experiences [5] Question: What are the plans for the North America Pet segment? - The company plans to strengthen the core Blue Buffalo business while driving growth through new product launches and expanded distribution [16][18]

Financial Data and Key Metrics Changes - Reported net sales for Q2 were $4.9 billion, down 7%, with a 6-point headwind from divestitures and acquisitions [23] - Organic net sales decreased by 1%, while organic volume was flat, showing sequential improvement from Q1 [25] - Adjusted operating profit was $848 million, down 20% in constant currency, primarily due to lower volume and higher input costs [24][30] - Adjusted diluted earnings per share totaled $1.10, down 21% in constant currency [24] Business Line Data and Key Metrics Changes - North America Retail organic net sales were down 3%, driven by unfavorable price mix, but organic volume growth modestly outpaced Nielsen measured retail volume growth [25] - North America Pet segment saw a net sales increase of 11%, with organic net sales up 1%, driven by favorable price mix [26] - North America Foodservice organic net sales were flat, with growth in frozen baked goods and cereal offset by a decline in bakery flour [27] - International segment organic net sales increased by 4%, led by growth in Brazil, China, India, and North Asia [28] Market Data and Key Metrics Changes - In North America Retail, the company held or grew pound share in eight of its top 10 U.S. categories [8][25] - The North America Pet segment experienced mid-single-digit growth in cat feeding, while dog feeding results were mixed [16] - The international segment held or grew dollar share in 54% of priority businesses, with strong performance from Häagen-Dazs and Nature Valley [28] Company Strategy and Development Direction - The company is focused on enhancing the "Remarkability" of its brands to restore organic sales growth [3] - Key priorities include returning North America retail to volume growth, accelerating North America pet growth, and driving efficiencies to fund investments [5][6] - The Remarkable Experience Framework guides brand investment decisions, focusing on product, packaging, brand communications, omnichannel execution, and value [6][10] Management's Comments on Operating Environment and Future Outlook - Management noted a change in consumer behavior, with lower and middle-income consumers increasingly making food purchases on promotion [9] - The company remains confident in its strategy to deliver more value to consumers amid economic pressures [10] - Fiscal 2026 guidance was reaffirmed, with expectations for improved organic net sales in the second half [32][33] Other Important Information - The adjusted gross margin was 34.8% of net sales, down 150 basis points due to higher input costs [29] - Capital investments in the first half totaled $253 million, with $659 million paid in dividends [31] Q&A Session Summary Question: What are the expectations for organic net sales in the second half of fiscal 2026? - The company expects improved organic net sales driven by the expanded impact of remarkability investments and favorable trade timing benefits in Q4 [32] Question: How is the company addressing the challenges in the North America Pet segment? - The company is focusing on strengthening the core Blue Buffalo business and driving growth through new product launches like Love Made Fresh [18] Question: What are the anticipated impacts of divestitures on future performance? - The divestitures are expected to continue to pose headwinds, but the company is managing these impacts through strategic investments and operational efficiencies [24][30]

Summary of General Mills Conference Call Company Overview - **Company**: General Mills - **Industry**: Packaged Food - **Key Products**: General Mills cereal, Pillsbury Doughs, Blue Buffalo Pet Food Core Insights and Arguments 1. **Economic Environment**: The food industry has faced dynamic changes, with inflation exceeding 30% over two years, impacting consumer purchasing power, especially for those earning less than $200,000 annually [4][5][6] 2. **Consumer Sensitivity**: Consumers are increasingly price-sensitive due to economic pressures, particularly affecting those without investments in the stock market [5][6] 3. **Marketing Adjustments**: General Mills has reevaluated its marketing strategies, particularly for Pillsbury, leading to price reductions to regain consumer interest [6][7] 4. **Volume Share Growth**: The company is experiencing volume share growth in eight out of its top ten categories in North America, indicating successful marketing and product strategies [7][8] 5. **Innovation Focus**: Increased new product innovation and marketing efforts are crucial for regaining dollar share growth, despite current dollar sales being down due to pricing strategies [8][9] 6. **Health Trends**: The demand for protein and fiber is rising, with General Mills adapting its product offerings to meet these consumer preferences [11][24][27] 7. **Cereal Category Challenges**: The cereal category is facing volume decline, but household penetration has stabilized, suggesting potential for recovery through innovation [30][31] 8. **Fresh Pet Food Launch**: The introduction of "Love Made Fresh" under Blue Buffalo has been well-received, with strong initial distribution and positive consumer feedback [34][35] 9. **Path to Profitability**: General Mills is confident in achieving profitability in the fresh pet food segment through scale and operational efficiencies [38][39] 10. **International Growth**: The focus on core global brands is expected to drive growth in international markets, with specific brands like Häagen-Dazs and Nature Valley leading the way [55][56] 11. **Food Service Sector**: The food service business is performing well, particularly in non-commercial channels like schools, which are expected to grow as economic conditions tighten [58][60] 12. **Cost Control Initiatives**: General Mills is implementing productivity savings and restructuring efforts to enhance efficiency and support innovation [62][63] 13. **M&A Strategy**: The company maintains a balanced approach to M&A, focusing on organic growth while remaining open to acquisitions that align with its strategic goals [68][69] Additional Important Points - **Consumer Trends**: The shift towards healthier options, including protein-rich products, is a long-term trend rather than a short-term fad [20][21] - **Impact of GLP-1**: The use of GLP-1 medications for weight loss is expected to influence food consumption patterns, but its overall impact on growth is projected to be modest [22][23] - **Cereal Market Dynamics**: The introduction of protein-based products within the cereal category is a response to changing consumer preferences [12][30] - **Integration of Acquisitions**: The integration of White Bridge Pet Brands is progressing well, with a focus on leveraging synergies and enhancing distribution [42][48] This summary encapsulates the key points discussed during the General Mills conference call, highlighting the company's strategic responses to current market conditions and consumer trends.

Financial Data and Key Metrics Changes - The company is focused on returning to volume growth, particularly in North America Retail (NAR), with significant investments in value and advertising leading to positive results [6][9] - The pricing mix in North America Retail was down 3% and down 1% at the company level, indicating challenges in maintaining pricing power [50][56] Business Line Data and Key Metrics Changes - The company has seen share growth in its international businesses, foodservice, health share, and pet segments, indicating a positive trend across various business lines [8] - The pet food business has experienced volatility due to a high proportion of e-commerce sales, but overall inventory levels are in a good place [33][34] Market Data and Key Metrics Changes - The fresh pet food segment is currently valued at $3 billion and is projected to grow to $10 billion in the next ten years, highlighting significant market potential [67] - The overall pet food category is growing at a slower rate than previously expected, with current growth rates around 12% to 13% [65][66] Company Strategy and Development Direction - The company is committed to significant investments in advertising and new product launches to drive growth, particularly in the fresh pet food category [20][67] - The strategy includes targeted pricing actions in specific categories to maintain competitiveness without engaging in a race to the bottom [50][52] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to rebuild margins over time, despite current investments impacting short-term profitability [25][28] - The company is focused on improving its value proposition and marketing effectiveness to drive consumer engagement and sales growth [107][108] Other Important Information - The company is experiencing a shift in consumer preferences towards protein-rich products, with new product launches expected to capitalize on this trend [85][87] - There is an emphasis on seasonal innovation, with plans to increase seasonal product offerings by 50% to enhance consumer engagement [90] Q&A Session Summary Question: Insights on margin potential for Blue Buffalo - Management highlighted strong consumer resonance with the Blue Buffalo brand and expressed confidence in building a profitable business through national launch efforts [15][17] Question: Balancing reinvestment and margin profile - Management acknowledged the need for careful management of reinvestment to avoid long-term margin erosion, with some investments expected to be temporary [25][28] Question: Clarification on pet inventory levels - Management confirmed that pet inventory levels are stable, but acknowledged the inherent volatility in e-commerce sales affecting retail inventory [33][34] Question: Organic revenue phasing for the year - Management indicated that trade expense phasing will impact organic sales numbers, with expectations for gradual improvement as investments take effect [45][46] Question: Competitive response to pricing actions - Management emphasized that pricing actions are targeted and not a broad-based reduction, aiming to maintain brand value while improving marketing effectiveness [50][52] Question: Fresh pet food market growth expectations - Management remains optimistic about the fresh pet food segment's growth potential, citing ongoing trends in pet humanization and market expansion [65][67] Question: Salty snacks performance and strategy - Management acknowledged challenges in the salty snacks category due to discretionary spending but expressed confidence in upcoming innovations to drive improvement [108]

Financial Data and Key Metrics Changes - The company is focused on returning to volume growth, particularly in North America Retail (NAR), with significant investments in value and advertising leading to positive results [5][6] - The company reported a price mix decline of 3% in North America Retail and 1% at the enterprise level for the quarter [48][55] Business Line Data and Key Metrics Changes - The company has seen share growth in its international businesses, foodservice, health share, and pet segments, indicating a positive trend across various business lines [6][7] - The pet food business has shown stability and slight growth, with successful advertising campaigns contributing to improved performance [35][36] Market Data and Key Metrics Changes - The fresh pet food segment is projected to grow significantly, with expectations of reaching $10 billion in ten years, indicating a strong market opportunity [68] - The overall pet food category is currently growing at about 12% to 13%, down from previous higher growth rates, but still presents a substantial market for the company [66][68] Company Strategy and Development Direction - The company is committed to expanding value investments in targeted businesses and enhancing consumer engagement through new product launches and marketing initiatives [5][6] - The strategy includes a focus on innovation in protein offerings and leveraging seasonal marketing opportunities to drive sales [90][91] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to rebuild margins over time despite current reinvestment strategies, emphasizing the importance of achieving scale in new investments [25][26] - The company is prepared to navigate inflation and tariff impacts while maintaining flexibility in its strategic revenue management [64][66] Other Important Information - The company is experiencing variability in pet inventory levels due to the high proportion of e-commerce sales, which are more volatile compared to traditional retail channels [31][32] - Significant marketing investments are planned for the national launch of fresh pet food, with a focus on generating trial and awareness among consumers [101] Q&A Session Summary Question: Insights on margin potential for Blue Buffalo - Management highlighted strong repeat rates and consumer resonance with the Blue Buffalo brand, indicating confidence in building a profitable business through national launch efforts [15][16] Question: Ensuring responsible margin management amid reinvestment - Management noted that some reinvestment factors are temporary, and they expect to mitigate tariff impacts while managing costs effectively post-Yoplait divestiture [25][26] Question: Clarification on pet inventory expectations - Management indicated that while there is some lumpiness in pet inventory, overall levels are in a good place, and they are cautious about predicting future movements [31][32] Question: Organic revenue phasing and category growth expectations - Management acknowledged trade expense phasing impacts on organic sales and emphasized a focus on competitiveness rather than relying on category rebounds [43][44] Question: Competitive response to pricing reinvestments - Management assured that pricing actions are targeted and not a race to the bottom, with a focus on maintaining brand value while investing in marketing and innovation [48][49] Question: Future pricing power and fresh business growth - Management emphasized the need for a balanced approach to growth through volume and pricing, with confidence in the long-term potential of the fresh pet food segment [60][66] Question: Evaluation of organic innovation versus acquisitions - Management stated that they evaluate growth opportunities based on their ability to win organically and have confidence in their capabilities to succeed in the fresh pet food category [105][106] Question: Performance outlook for salty snacks - Management acknowledged challenges in the salty snacks category due to discretionary spending but expressed optimism about upcoming innovations and marketing strategies [110][111]