General Mills, Inc. reported a sharp drop in third-quarter profits for fiscal 2026, signaling continued pressure for the Cheerios maker. General Mills’ third quarter net profit for fiscal year 2026 fell as much as 52% to $303, largely due to lower operating profit and a higher effective income tax rate.
The company reported $625.6 million in net profit during the same period last year.
General Mills’ Fight for Growth
The Minneapolis, Minnesota-headquartered consumer food maker is going through a tough time with quarterly sales growth turning stagnant. The company has reported quarterly sales in the $4 billion to $5 billion range for several years. It has been more than a decade since General Mills crossed the mark of $4 billion in quarterly revenues.
General Mills reported $4.4 billion in net revenue in the third quarter of FY 2026. It is 8% lower as compared to the same quarter of previous year.
The company attributed the decline in part to divestitures as one of the major reasons for sliding sales, stating: “a 6-point headwind from the net impact of divestitures”.
Higher costs of raw materials, and a slightly lower demand have furthered the pain for the branded food processor. The strategic decision to reshape the portfolio by offloading low-growth and low-margin businesses, intended to achieve long-term growth, has hurt the brand in the recent quarter.
“We’re reaffirming our fiscal 2026 guidance today, as our focus on executing our Remarkability playbook continued to deliver stronger competitiveness for our brands in the third quarter,” said General Mills Chairman and Chief Executive Officer Jeff Harmening.
Stock Declines
Continued flat growth has weighed on investor sentiment. The stock of General Mills (NYSE: GIS) is down 16% on a monthly basis. Over the period of last 12 months, the stock is trading 36% lower, while it has registered a nearly 59% of its value when compared to the all-time high price of around $92, achieved in May of 2023.
The stock closed marginally lower at $37.50 on March 19, 2026, after making a fresh 52-week low of $37.13.
Back-to-back quarters of muted growth have prompted several investment banks to revise their price targets. Several analysts covering General Mills have slashed the share price targets following the Q3 FY 2026 results.
UBS cut its price target to $35 from $40, maintaining a ‘Sell’ rating. Goldman Sachs, the bank which was bullish on General Mills earlier, has now downgraded its rating to ‘Neutral’ from ‘Buy’, while reducing the share price target to $58 a piece.
Other major investment banks that have either downgraded the rating, or slashed share price target for General Mills include Barclays, BofA Securities, Jefferies, Wells Fargo, Mizuho, Bernstein SocGen.
Struggling North American Segments
Two major North American segments of General Mills have seen a double-digit drop in the net sales which has substantially affected the overall revenues. The net sales of the retail segment slid 14% to $2.6 billion, while that of the foodservice segment fell 11% to $496 million.
Both of these segments are reportedly affected by the divestitures with retail and foodservices witnessing a 9-point, and 7-point headwinds, respectively, from the North American Yogurt divestitures.
“Net sales were down double digits for the Big G Cereal & Canada operating unit, including the impact of the yogurt divestitures, down high-single digits for U.S. Snacks, and down low-single digits for U.S. Meals & Baking Solutions,” General Mills said in a SEC filing.
Meanwhile, the North American Pet and International segments supported the brand positively during the quarter under review, while both of these were able to partly offset the losses contributed by retail and foodservice segments.
According to General Mills, the third-quarter net sales for the North America Pet segment rose marginally 3% to $640 million which included a 6-point benefit from the North American Whitebridge Pet Brands acquisition. “Net sales were up double digits for cat food, up mid-single digits for pet treats, and down mid-single digits for dog food,” the company reported, adding, “third-quarter net sales for the international segment increased 7 percent to $696 million, including a 6-point benefit from foreign currency exchange. Organic net sales were up 1 percent, driven by growth in India and China, partially offset by a decline in Europe.”
Shrinking Margins, Eroding Profitability
The profitability has become a concern for General Mills as the company reported the lowest Q3 profit in more than a decade. Higher input costs have steered 310 basis points in General Mills’ gross margin to 30.8%.
This led to a 41% drop in the operating profit to $525 million. This was primarily due to “lower gross profit dollars in fiscal 2026 and a divestiture gain in the prior-year period,” the company said.
“We started the year expecting that our investments, divestitures, and unfavorable timing comparisons would drive declines in our sales and earnings results through our first three quarters, even as we improved our volume and market share. And that’s what we’ve seen play out,” Jeff Harmening indicated while announcing the Q3 results.
General Mills has affirmed to restore volume-driven organic net sales growth as the top-priority for the firm. However, the company expects the net sales for full fiscal 2026 to decrease by 4% due to the net impact of divestitures, acquisitions, foreign currency exchange, and the 53rd week.
“As we move to the fourth quarter, we expect to deliver a step up in organic sales trends and return to earnings growth, driven by favorable timing comparisons, the 53rd week, and our continued market share momentum,” the Chairman and CEO said further.
General Mills has said that the corporation will increase its investment in consumer value, product news, innovation, and brand building to bolster its categories and market share performance.
