By Nicholas G. Miller
General Mills reported lower second-quarter profit and sales after implementing price cuts to attract inflation-weary consumers, who the company said are seeking more promotions due to financial strain.
We "continue to see consumer weakness, particularly for those making under $100,000 a year," said Chief Executive Jeff Harmening in the company's earnings call. "We continue to see that consumer being stretched even as consumers in the higher end of the range are faring a lot better with the current stock market."
General Mills has lowered prices across two-thirds of its portfolio to attract budget-conscious consumers and the company said those price investments are starting to lead to volume growth and market share expansion. "We're encouraged that in almost every case where we've made the investments, we've seen the volume response that we are expecting," said Dana McNabb, president of the company's North America retail segment.
Shares rose 3% to $48.44. The stock is down 24% so far this year.
In the company's North America retail division, organic volume rose 1% even as the division's net sales fell 3% due to its price cuts.
But that volume growth has become more costly for the company with shoppers opting for promotions more often. "When there is a discount, we see them buying more because they're financially strained," Harmening said.
The company said consumers are eating more at home, switching what and how they buy and looking for discounts.
"With lower- and middle-income consumers continuing to feel significant economic pressure, we've seen them make a greater proportion of their food purchases on promotion rather than at everyday prices," Harmening said.
The company said its price cuts were focused on narrowing price gaps with the competition and that while it could consider additional price investments, it wouldn't lower prices to the level of private labels.
For its fiscal second quarter, the maker of Cheerios cereal and Pillsbury dough reported net income of $413 million, or 78 cents a share, down from $795.7 million, or $1.42 a share, the year before.
Adjusted earnings were $1.10 a share. Analysts had expected $1.03 a share, according to FactSet.
Net sales fell 7% to $4.9 billion. Wall Street had expected $4.78 billion.
The company reaffirmed its full-year outlook, forecasting net sales to be down 1% to up 1%, and adjusted earnings per share to be down 10% to 15% in constant currency.
Write to Nicholas G. Miller at nicholas.miller@wsj.com.
(END) Dow Jones Newswires
December 17, 2025 11:10 ET (16:10 GMT)
Copyright (c) 2025 Dow Jones & Company, Inc.
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