By Evie Liu and Kit Norton

Shares of General Mills declined Wednesday as the cereal and packaged foods maker continued to grapple with a difficult demand environment but posted better-than-expected quarterly earnings.

General Mills stock fell 1.6% to $34.87 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. Shares jumped nearly 9% after General Mills' better-than-expected fourth-quarter report on July 1, but much of that enthusiasm has evaporated.

The company on Wednesday 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 stuck by its fiscal 2027 business outlook.

General Mills two weeks ago reaffirmed its fiscal-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 $3.55 a share in fiscal 2026.

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.

"We are off to an encouraging start in fiscal 2027," CEO Jeff Harmening said in the earnings release. "We are also executing with discipline in a volatile environment."

The company is hoping product innovation can help 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.

Harmening added he remains confident General Mills will deliver on its fiscal 2027 guidance as consumer demand appears healthy enough to support the outlook.

Sales momentum, however, remained an issue in the quarter. Organic net sales overall were essentially flat from a year ago. General Mills' net sales for its North America retail segment declined 7%.

Investors were broadly looking for evidence that a long-running sales slump at the Cheerios maker was finally starting to ease. The earnings report wasn't enough.

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

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September 23, 2026 09:56 ET (13:56 GMT)