- Organic Sales Growth: 2nd-quarter fiscal 2026 shows improved organic sales driven by pricing actions and HMM efforts, with 90% of price investments meeting or exceeding expectations.
- North America Retail Momentum: 8 of 10 top categories gained pound share, while volume trends improved under the remarkability framework despite flat Nielsen pounds.
- Pet Segment Recovery: Life Protection Formula regained share growth, and Love Made Fresh achieved 5% market share within early customers and 4.8/5 rating, targeting 5,000 coolers by January 2026.
- Pricing Strategy Impact: Price mix declined 3% YTD, but strategic pricing aims to avoid private-label parity, with Q3 expected to narrow volume-value share gaps.
- Financial Outlook Adjustments: Q3 EPS may drop ~20% due to shipment timing unwinds and lapping pricing moves, though $100M in HMM savings and 53rd-week tailwinds support Q4 profit growth.
Segment Performance
The North America Pet segment has gained momentum, with the Life Protection Formula returning to share growth and the Cat business growing mid-single digits. The Love Made Fresh launch has reached 5% market share in early customers and has a 4.8 out of 5-star rating. The company expects to be in about 5,000 coolers by the end of January. The Pet segment performance improved, driven by Love Made Fresh, improved base business, and brand-specific initiatives.
Guidance and Outlook
General Mills expects continued organic sales improvement in the second half, with a significant tailwind in Q4 from trade expense timing and the 53rd week. The company still expects full-year guidance, despite higher cost of volume that will pressure margins in Q3. Kofi Bruce emphasized that the company's focus on HMM delivery and transformation savings provides leverage and flexibility in the middle of the P&L.
Valuation and Metrics
General Mills' current valuation metrics are as follows: P/E Ratio at 10.21, P/B Ratio at 2.78, P/S Ratio at 1.39, EV/EBITDA at 11.39, Dividend Yield at 5.06%, Free Cash Flow Yield at 8.04%, ROIC at 10.97%, and ROE at 27.21%. With analysts estimating next year's revenue growth at -4.6%, the current valuation may be reasonable, considering the company's stable dividend yield and decent return on equity.
Pricing Environment and Strategy
The pricing environment is not expected to change significantly, with levels of discounting similar to last year. General Mills' pricing strategy aims to get under price cliffs, not to match private label prices. The price mix in NAR is down about 3% so far this year. In the third quarter, General Mills will lap some pricing moves from last year, and the gap between volume share and value share is expected to narrow.