By Evie Liu and Kit Norton

Shares of General Mills rose on Wednesday after the cereal and packaged foods maker posted better-than-expected quarterly earnings even as the company continues to grapple with a difficult demand environment.

The company posted adjusted earnings of 75 cents a share for its fiscal first quarter ended Aug. 30, down from 86 cents a year ago but above Wall Street's expectation for 72 cents. Net sales fell 3% to $4.4 billion, slightly beating the analyst consensus call for $4.35 billion, according to FactSet.

The company said the net sales decline was due to the divestiture of its U.S. yogurt business. General Mills also reaffirmed its fiscal 2027 business outlook.

General Mills spent much of fiscal 2026, which ended on May 31, lowering prices to win back consumers as budget-conscious shoppers became increasingly value sensitive.

General Mills stock rose 1% to $35.83 in premarket trading on Wednesday after ending Tuesday up 0.1%. Shares have fallen 14% in September and have declined 24% this year as of the closing bell on Tuesday.

This is breaking news. Read a preview of General Mills earnings coverage below and check back for more analysis soon.

Investors are looking for evidence that a long-running sales slump at the Cheerios maker is finally starting to ease.

General Mills is facing high inflation while its cost-saving initiatives are still ramping up. The company told investors in July that first-quarter sales and profit growth would fall below its full-year ranges, but notes that cost savings are expected to pick up as the year progresses.

The quarter also faces a tough comparison because last year's results included one month of sales from General Mills' U.S. yogurt business, which the company has since sold.

The stock could use some reassurance. Shares jumped nearly 9% after General Mills' better-than-expected fourth-quarter report on July 1, but much of that enthusiasm has evaporated.

The stock climbed to $41.55 in late August before sliding back to roughly $35.45 as of Tuesday's close, leaving it down more than 20% this year.

The central issue to watch on Wednesday will be demand.

The company is also hoping product innovation could help further rebuild demand. Higher-protein Cheerios, new snack and frozen-food products, and premium pet-food brands such as Tiki Cat are meant to give shoppers reasons to buy beyond discounts.

Those efforts are starting to show results. North America Retail organic sales were flat from a year ago in the fourth quarter, and management said earlier this month that retail sales trends were improving and consumers were responding to new products.

Still, profit margins could remain under pressure. General Mills expects input-cost inflation of 4% to 5% this fiscal year, driven partly by higher labor, energy, and food ingredients costs. The company has also flagged tariffs on steel and aluminum, which raise packaging costs.

General Mills has some protection against those pressures, having locked in much of its key input costs through hedging and long-term supplier contracts. It also expects at least $750 million in cost savings for the fiscal year. But those savings are expected to ramp up over the year, leaving the first quarter more exposed to higher costs.

Just two weeks ago, General Mills reaffirmed its full-year guidance for organic sales ranging from down 1.5% to up 0.5% and adjusted earnings of $3 to $3.20 a share. That's down from fiscal 2026's $3.55 a share.

For Wednesday's report, investors will likely focus less on whether earnings land a penny above or below consensus. Instead, they'll watch closely whether consumer demand in the latest quarter was improving enough to keep that full-year outlook intact.

Write to Evie Liu at evie.liu@barrons.com and Kit Norton at kit.norton@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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September 23, 2026 07:11 ET (11:11 GMT)