General Mills Lowers Profit Outlook on Price Cuts

(Bloomberg) -- Cheerios maker General Mills Inc. lowered its profit outlook for fiscal 2025 in order to invest in price reductions to drive sales.

The company now expects adjusted earnings per share to range between a decline of 3% to 1%, compared with a previous range of down 1% to up 1%.

The shares fell 6% before the start of regular trading on Wednesday in New York. The stock had risen 1.2% so far this year through Tuesday’s close, versus a 27% gain for the S&P 500 Index.

General Mills CEO Jeff Harmening said the company made investments “to bring consumers greater value.” Even as it also lowered the company’s profit outlook, Harmening said the move positions it for “sustainable growth in fiscal 2026 and beyond.” Margins improved, General Mills said, but noted that cost inflation continues to be a factor.

With shoppers purchasing fewer items at the supermarket after years of price increases squeezed budgets, companies like General Mills have been forced to offer more discounts to shoppers. Food companies have been looking for ways to expand margins through operational efficiencies, which has also driven more interest in mergers and acquisitions.

For General Mills, the impact of price cuts was clear: The company said that it dropped prices on pet food, and rebuilt retailer inventory, driving sales improvements in the category. In North American retail, overall pounds sold declined while prices went up, but discounts improved sales in cereal and fruit snacks.

(Updates shares and with details in the last two paragraphs.)