General Mills, Inc. (NYSE:GIS) reported fiscal 2027 Q1 results on September 23, with sales and earnings declining year-over-year but coming in slightly ahead of analysts’ expectations. Net sales fell 3% to $4.4 billion. The company said this was mainly due to the divestiture of its US yogurt business. Adjusted diluted EPS declined 13% in constant currency to $0.75. Analysts had expected revenue of $4.35 billion and adjusted diluted EPS of $0.72.
The company also reaffirmed its full-year fiscal 2027 outlook. General Mills, Inc. expects organic net sales to range from a 1.5% decline to 0.5% growth, while adjusted diluted EPS is expected to come in between $3.00 and $3.20. The EPS range is below the $3.55 reported for fiscal 2026. This highlights the pressure the company continues to face despite maintaining its overall outlook.
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The US yogurt divestiture, completed in Q1 fiscal 2026, was the only significant transaction affecting the comparability of the year-over-year results. General Mills, Inc. said it also completed the sale of its Brazil business on September 2, 2026, after the end of the first quarter of fiscal 2027.
Portfolio Changes and Cost Savings
The divestitures show that the company is reshaping its portfolio and increasing its focus on brands and platforms that provide the strongest opportunities for profitable growth. However, General Mills, Inc.’s performance remains a concern, as it has yet to return to growth.
The company is looking to improve profitability through cost savings and efficiency measures. General Mills, Inc. is targeting $3 billion in cumulative cost savings by fiscal 2030, mainly through its Holistic Margin Management productivity program and global transformation initiative. The company said that it expects savings worth $750 million to be delivered in fiscal 2027.
These efforts could help the company offset elevated inflation while providing funding for growth investments and supporting stronger earnings and cash flow. This is especially important for General Mills, Inc. because its steady cash generation has helped support its long-standing dividend.
General Mills, Inc. remains popular among income-focused investors. The company and its predecessor have paid dividends without interruption for 127 years. Its current dividend stands at $0.61 per share and carries a high annual dividend yield of 7.25%.
However, these positives come alongside several operational challenges. Management noted that Totino’s business remains under pressure. While declines were cut in half, further improvement is needed. The pet dry dog food business has also weakened, with the Wilderness brand seeing accelerated declines. Management said it will require changes to its products, packaging, and marketing.
Hedge Fund Interest
Hedge fund interest in the stock increased during the second quarter. According to Insider Monkey‘s database, 46 hedge funds held General Mills, Inc. at the end of the second quarter, up from 44 in the first quarter.
However, as of September 15, short interest stood at 10.91% of General Mills, Inc.’s float, pointing to a relatively high level of bearish positioning around the stock.
The slightly better-than-expected quarterly results and planned $3 billion in cost savings provide evidence that the company is actively working to stabilize earnings and improve cash flow. The divestitures and 7.25% dividend yield also strengthen the bull case for investors focused on cash returns as the company reshapes its business. However, General Mills, Inc. still faces declining earnings, an outlook below fiscal 2026 EPS, and continued weakness in businesses such as Totino’s and Wilderness. The company may need to show that its cost-savings efforts and portfolio changes can help it return to growth.
