General Mills' second quarter results did not meet Wall Street’s sales expectations, with revenue declining year over year—a trend that prompted a significant negative market reaction. Management attributed the underperformance to ongoing volume declines and competitive pressures in core categories, especially within North America Retail. CEO Jeffrey Harmening noted the company’s increased focus on value investments in key brands such as Pillsbury and Totino’s and expanded efforts in soup, cereal, and fruit snacks. Harmening acknowledged, “We know that it’s an investment year, but we are very confident these investments will pay off given what we’ve seen over the last couple of quarters.”
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General Mills (GIS) Q2 CY2025 Highlights:
- Revenue: $4.56 billion vs analyst estimates of $4.58 billion (3.3% year-on-year decline, 0.5% miss)
- Adjusted EPS: $0.74 vs analyst estimates of $0.71 (4.1% beat)
- Adjusted EBITDA: $758.1 million vs analyst estimates of $749.6 million (16.6% margin, 1.1% beat)
- Operating Margin: 11.1%, down from 16.5% in the same quarter last year
- Organic Revenue fell 3% year on year (-6% in the same quarter last year)
- Sales Volumes fell 2% year on year, in line with the same quarter last year
- Market Capitalization: $28.83 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions General Mills’s Q2 Earnings Call
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Ken Goldman (JPMorgan) asked about the margin outlook for Blue Buffalo’s national fresh pet food launch and the company’s merchandising strategy. CEO Jeffrey Harmening explained that profitability will improve as scale is achieved, but early investments are necessary to build consumer trial.
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Andrew Lazar (Barclays) questioned how General Mills will manage margin impacts from increased reinvestment. CFO Kofi Bruce said some headwinds, like tariffs and stranded costs, are temporary and can be mitigated over time as investments mature.
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Peter Galbo (Bank of America) sought clarification on pet food inventory trends and underlying pet segment performance. Harmening acknowledged ongoing volatility due to e-commerce dynamics but noted the business has stabilized and is positioned for further growth.
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Robert Moskow (TD Cowen) pressed management on the sustainability of pricing power and the long-term outlook for the fresh pet business. Harmening stated that over time, a balanced mix of volume and pricing is needed, and the fresh pet segment remains a significant growth opportunity despite slower category growth rates.
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Max Gumport (BNP Paribas) inquired about the relationship between volume gains and dollar sales, especially in categories where price declines outpaced volume growth. Harmening explained that volume outperformance is expected in the first half, with dollar share gains anticipated later as pricing and marketing investments take effect.
Catalysts in Upcoming Quarters
In the next few quarters, our team will be monitoring (1) the volume response to expanded value investments and new product launches, (2) the pace at which margin pressures from tariffs and one-time costs begin to abate, and (3) the national rollout and consumer adoption of Blue Buffalo’s fresh pet food line. Execution in core North America Retail categories and the effectiveness of marketing investments will be critical to tracking the company’s progress.
General Mills currently trades at $52.38, down from $53.37 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free).
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