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General Mills (GIS) is moving higher today after reporting its Q2 (Nov) results this morning. The packaged food giant beat EPS expectations, though EPS fell sharply yr/yr as stepped-up brand investment and higher costs continued to squeeze margins. Revenue also declined, but less than analysts had expected, falling 7.2% yr/yr to $4.68 bln. GIS also reaffirmed its FY26 guidance.

• Organic volume and organic sales improved by 1 pt and 2 pts, respectively, compared to Q1, with organic volume flat and organic sales down 1%.
• Notably, organic volume in North America Retail increased 1%, its first growth in more than four years, though organic sales in the segment still fell 3% as unfavorable price/mix offset the volume improvement.
• North America Pet and International also improved, with Pet returning to organic sales growth (+1%) and International organic sales up 4%, helped by a return to +4% volume growth after -2% in Q1.
• These results reflect progress in its "remarkability" strategy, leaning into value investments, more innovation/product news, and higher advertising, but that push is still weighing on profitability, with adjusted operating margin down 290 bps to 17.4%.
• GIS also noted continued pressure on consumers, who are buying more on promotion, raising the cost of volume even though promo depth and frequency are largely unchanged, which reinforces the need for its value investments.
• Looking ahead, it expects momentum to keep building through the remainder of the year as its investments gain traction and comparisons turn more favorable.

Briefing.com Analyst Insight

On paper, this report still looks a bit rough, with sharp yr/yr declines on the top and bottom line and margins remaining under pressure amid a difficult operating environment and continued reinvestment in value and innovation. That said, underlying trends finally improved. What really stood out was North America Retail returning to organic volume growth for the first time in over four years. Organic sales in the segment still declined, but with two-thirds of the base pricing work now in place and comparisons easing later in the year, management sounded confident that trends can keep improving. It also highlighted continued share holds and gains, which suggests the portfolio is holding up reasonably well in a tough backdrop, and it remains upbeat on the Love Made Fresh rollout in Pet. Overall, this report showed progress on the strategy, and the key now is seeing that volume and share momentum continue to build from here.