General Mills Smashes Q2 Sales Targets but Slashes Profit Outlook

General Mills released sales and profit figures for the second quarter of fiscal year 2025. Coming in above analysts’ projections of $5.14 billion, sales reached $5.24 billion for the period. Profit hit an adjusted $1.40 per share, crushing expectations of $1.22 a share.

While the numbers looked good for the quarter that ended on Nov. 24, they did not reflect General Mills’ annual profit outlook. For the year, the Cheerios maker expects profits to drop 1% to 3%. Its prior guidance predicted a profit range between a 1% loss and a 1% gain.

The annual guidance adjustment is in anticipation of General Mills’ investments to boost brand promotions. Administrative and marketing expenditures have increased in the current quarter.

“To achieve and build on these enterprise-wide gains, we’ve made incremental investments to bring consumers greater value,” said CEO Jeff Harmening. “While these investments lower our profit outlook for fiscal 2025, they better position General Mills for sustainable growth in fiscal 2026 and beyond.”

General Mills’ Value Messaging

Like many food companies, General Mills has been struggling to attract and retain price-conscious consumers. As inflation bumped the prices of essentials, shoppers have been opting for cheaper, store-label products instead of name brands such as General Mills.

“As we moved through the quarter, it became clear that our product news and media support were not breaking through because we didn’t have the right value,” Harmening said during a recent earnings call.

The company particularly noted the poor performance in the last quarter of its Pillsbury brand of refrigerated dough. Even though consumers tend to bake more during the holiday season, sales were “disappointing.”

Budget-strapped shoppers are also pushing back on an annoying trend in the food industry: shrinkflation. The ongoing backlash prompted U.S. lawmakers to step in and warn food companies, General Mills included, about the practice.

In a letter sent by Senator Elizabeth Warren and Representative Madeleine Dean, the company was accused of reducing cereal box sizes and subsequently raising prices. While General Mills did not comment on the alleged shrinkflation of its products, the company may have been trying to pass production expenses onto consumers. Now, it appears, the food giant is looking for ways to improve its messaging to consumers while remaining profitable moving forward.