General Mills Restores Organic Sales After a Third-Quarter Drop
Organic net sales were essentially flat in the fiscal 2027 first quarter, reversing a 3% organic decline, as reported sales fell 3% to $4.4 billion on the U.S. yogurt sale.
General Mills (GIS) reported organic net sales that were essentially flat in the fiscal 2027 first quarter ended August 30, 2026, reversing a 3% organic decline in the third quarter. Reported net sales fell 3% to $4.4 billion, which the company attributed to the U.S. yogurt divestiture.
That turn is the quarter’s defining move. In the fiscal 2026 third quarter, organic sales had been down 3% and reported sales down 8%. In the fourth quarter, reported sales rose 1% to $4.6 billion while organic sales were in line with the year-ago period. The first quarter of the new fiscal year held organic sales at year-ago levels even as the yogurt sale continued to weigh on the reported line.
Chairman and Chief Executive Officer Jeff Harmening said the company was “off to an encouraging start in fiscal 2027, driving improved topline performance with stronger product innovation and renovation focused on the benefits consumers are looking for today.” He said the company remained confident in its ability to deliver fiscal 2027 guidance.
Gross margin held at 33.9% of net sales, up from 30.8% in the third quarter. Adjusted gross margin was 33.3%, up from 30.6% in that quarter. The company said higher input costs were offset by favorable mark-to-market effects and favorable net price realization and mix on a reported basis; on an adjusted basis, higher input costs were only partially offset by net price realization and mix.
Operating profit of $634 million was down 63% versus a year earlier, driven largely by a $1 billion gain on the yogurt divestiture in the year-ago quarter. Operating profit margin was 14.4%. Adjusted operating profit of $634 million was down 11% in constant currency, versus a 13% constant-currency increase in the fiscal 2026 fourth quarter and a 32% constant-currency decline in the third quarter. Adjusted operating profit margin was down 130 basis points to 14.4%. Diluted EPS was $0.74, down 67%; adjusted diluted EPS of $0.75 was down 13% in constant currency.
North America Retail, the largest segment, posted net sales of $2.4 billion, down 7%, including a 4-point headwind from the yogurt sale. Organic net sales in the segment were down 3% and lagged Nielsen-measured retail sales by about 1 point, which the company said was driven by changes in retailer inventory. The segment drove a 2-point sequential improvement in retail sales growth, with dollar share trends strengthening in the majority of priority categories. Segment operating profit was $479 million, down 15% as reported and in constant currency.
North America Pet net sales of $613 million essentially matched year-ago levels; organic net sales were flat. Cat food sales were up double digits, pet treats up low-single digits, and dog food down high-single digits. Segment operating profit was $100 million, down 12%. The company continues to expect retailer inventory will be a low-single-digit headwind to full-year organic net sales for the pet segment.
North America Foodservice net sales were up 1% to $523 million, including a 2-point yogurt headwind. Organic net sales were up 4%, led by cereal and frozen meals. The company said the segment held or gained market share across 100% of its priority businesses. Segment operating profit was up 12% to $79 million.
International net sales increased 4% to $794 million, including a 1-point foreign-currency benefit. Organic net sales were up 4%, driven by distributor markets, India, and China. Segment operating profit of $75 million was up 14% as reported and up 15% in constant currency, which the company attributed to higher volume and lower input costs, partially offset by unfavorable net price realization and mix and a double-digit increase in media investment.
Cash provided by operating activities totaled $298 million. The company did not repurchase shares in the quarter, compared with $500 million a year earlier. Dividends paid were $330 million. The Brazil divestiture closed on September 2, 2026, after quarter-end.
General Mills reaffirmed its full-year fiscal 2027 outlook: organic net sales expected between down 1.5% and up 0.5%, adjusted operating profit down 13% to down 8% in constant currency, and adjusted diluted earnings of $3.00 to $3.20 a share. The company continues to expect at least $750 million in savings from its Holistic Margin Management program, global transformation initiative, and other cost actions, which are expected to offset input cost inflation and brand investments. It also continues to expect headwinds of about 9 points on operating profit and 11 points on EPS from lapping the 53rd week, normalizing corporate incentive expense, and fiscal 2026 divestitures. The net impact of divestitures, foreign currency, and the 53rd week is now expected to reduce full-year reported net sales growth by about 4%.