General Mills Q3 Sales Fall 8% to $4.4B, FY26 EPS Slashed 16%-20%
General Mills' 6.3% dividend costs $1.3B and H1 FY26 buybacks totaled $500M, with 80-90% of an estimated $1.885B FCF earmarked for payouts implying 8.2% yield. Q3 net sales fell 8% to $4.4B and adj. EPS was $0.64, while FY26 organic sales to decline 1.5%-2% and adj. EPS 16%-20%.
1. Dividend and Buyback Strategy
General Mills maintains a 6.3% dividend costing $1.3 billion per year and repurchased $500 million in the first two quarters of FY26. Management plans to allocate 80%–90% of an estimated $1.885 billion free cash flow to dividends and buybacks, implying a combined yield of up to 8.2%.
2. Q3 Fiscal 2026 Results
Net sales in Q3 declined 8% year-over-year to $4.4 billion, reflecting lower volumes and the yogurt divestiture. Adjusted EPS came in at $0.64, missing analyst estimates, while gross margin contracted 310 basis points to 30.8% due to higher input costs and mix shifts.
3. FY26 Guidance Outlook
The company reaffirmed full-year guidance but narrowed expectations, forecasting organic net sales down 1.5%–2% (previously -1%–+1%) and adjusted operating profit and EPS to drop 16%–20%. Free cash flow conversion is projected at a minimum of 95% of adjusted after-tax earnings, with ongoing cost-savings targets of 5% in COGS.
4. Segment Performance and Macro Trends
North American Retail sales fell 14% and Foodservice declined 11%, offset partially by a 7% uplift in International and 3% growth in North American Pet. Broader consumer headwinds—including rate-driven spending cuts and potential eating pattern shifts from GLP-1 treatments—continue to pressure U.S. volumes.