GIS Q3 Deep Dive: Volumes Remain Under Pressure as General Mills Invests in Innovation and Value

September 18, 2025 at 01:30 AM EDT

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Packaged foods company General Mills (NYSE: GIS) met Wall Street’s revenue expectations in Q3 CY2025, but sales fell by 6.8% year on year to $4.52 billion. Its non-GAAP profit of $0.86 per share was 5.4% above analysts’ consensus estimates.

Is now the time to buy GIS? Find out in our full research report (it’s free).

General Mills (GIS) Q3 CY2025 Highlights:

Revenue: $4.52 billion vs analyst estimates of $4.51 billion (6.8% year-on-year decline, in line)
Adjusted EPS: $0.86 vs analyst estimates of $0.82 (5.4% beat)
Adjusted EBITDA: $841.5 million vs analyst estimates of $818.8 million (18.6% margin, 2.8% beat)
Operating Margin: 15.6%, down from 17.2% in the same quarter last year
Organic Revenue fell 3% year on year vs analyst estimates of 2.8% declines (18.4 basis point miss)
Sales Volumes fell 8% year on year (0% in the same quarter last year)
Market Capitalization: $26.3 billion

StockStory’s Take

General Mills’ third quarter performance aligned with Wall Street’s revenue expectations, with adjusted profit surpassing consensus. Management emphasized that the notable year-over-year sales decline reflected both continued softness in sales volumes and the impact of portfolio changes, including the divestiture of the U.S. yogurt business. CEO Jeffrey Harmening highlighted, “We strengthened our pound share in 8 of our top 10 categories,” attributing this to targeted price and product investments, but acknowledged that certain categories, such as baking and cereal, continue to lag and require further improvement.

Looking ahead, General Mills’ management is focused on regaining organic growth through investments in new product innovation, pricing adjustments, and brand campaigns. The company plans to complete further price optimization in the coming quarters, especially in categories like baking and soup. Harmening stated that, “Our new product volumes are already up 25%,” and added that continued progress in pet foods and international markets are expected to support future competitiveness, even as consumer value-seeking and regulatory changes present ongoing challenges.

Key Insights from Management’s Remarks

Management attributed the quarter’s results to targeted pricing actions, product innovation, and the effects of portfolio adjustments, while discussing the continued importance of adapting to evolving consumer demand and cost pressures.

Price investments drive share gains: General Mills implemented price reductions and promotional adjustments in key categories, such as refrigerated dough and fruit snacks, to better align with consumer value perception. Management noted that these actions led to pound share improvement in most top categories, though they stressed that further work is needed in areas like cereal and Totino’s.
Innovation fuels new product momentum: The company increased its focus on new product launches, raising the share of net sales from new products to approximately 5%, up from 3.5% a year ago. Examples include the successful rollout of Cheerios Protein and Nature Valley Creamy Protein bars, which are designed to align with shifting consumer preferences for higher protein content.
Pet category mixed performance: In the pet segment, the core BLUE Life Protection Formula and cat food businesses grew, supported by strong advertising and new product claims. However, the Wilderness line underperformed, prompting plans for a refreshed product proposition and the introduction of Edgard & Cooper through a partnership with PetSmart.
Margin improvement reflects cost savings and timing: Operating margin benefited from lighter-than-expected inflation and timing benefits in the international business. CFO Kofi Bruce explained that some of these margin gains are transitory and expected to unwind next quarter as cost pressures and normalization of trade expenses resume.
Regulatory and consumer trends shape reformulation: General Mills is proactively responding to consumer demand for simpler ingredient lists and evolving state-level regulations by accelerating the removal of artificial dyes across its portfolio. Harmening noted that maintaining flexibility amid varying state requirements may result in higher costs and operational complexity.

Drivers of Future Performance

General Mills’ outlook centers on regaining volume growth and sustaining margin improvements despite persistent consumer caution and category-specific challenges.

Further price and value optimization: Management plans to finish price adjustments across two-thirds of its portfolio in upcoming quarters, focusing on remaining categories like baking and soup. The expectation is that more competitive base pricing, combined with promotional activity, will help restore household penetration and stabilize volumes, although the company does not anticipate needing broad share gains to meet annual goals.
Ramp-up of innovation and product launches: The company aims to increase the proportion of revenue from new products, with a particular focus on protein-rich cereals, snacks, and pet food. Harmening indicated that these launches are “bigger and better ideas with more staying power,” and are expected to diversify revenue sources and respond to trends such as increased protein demand driven by dietary shifts and GLP-1 medication usage.
Managing cost inflation and regulatory risk: General Mills expects inflationary pressures will intensify in the next quarter, particularly in supply chain and inventory absorption costs, before potentially easing in the second half of the year. Additionally, management is preparing for operational impacts from ongoing regulatory changes at the state level, with a preference for a harmonized federal approach to ingredient standards.

Catalysts in Upcoming Quarters

In coming quarters, our team will watch (1) execution of price adjustments and the impact on volume trends, (2) the scale and commercial success of new product launches, especially in protein-forward and pet categories, and (3) the company’s ability to sustain operating margin improvements as inflation and regulatory costs evolve. Progress on innovation and category performance will be key signals of momentum.

General Mills currently trades at $49.39, in line with $49.61 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free).

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