General Mills (General Mills (GIS)) stock climbed Wednesday after the packaged food maker reported fiscal fourth-quarter results that topped Wall Street estimates, even as it issued a cautious outlook for fiscal 2027.

The company reported fourth-quarter net sales of $4.610 billion, up 1% from a year earlier and ahead of the analyst consensus estimate of $4.595 billion. Organic net sales were flat.

Adjusted earnings came in at 95 cents per share, up 27% in constant currency and above the Street estimate of 80 cents. On a GAAP basis, the company posted a loss of $3.74 per share, compared with earnings of 53 cents a year earlier.

The loss reflected $1.8 billion in noncash goodwill and brand intangible impairment charges and a $1.0 billion valuation loss related to the planned sale of its Brazil business.

Margins Improve Across Most Businesses

Gross margin expanded 240 basis points to 34.8%, while adjusted operating profit increased 13% in constant currency to $705 million.

North America Retail sales declined 4% to $2.5 billion, although operating profit increased 7% to $506 million. North America Pet sales rose 4% to $702 million despite a 3% decline in organic sales, while operating profit increased 14% to $160 million.

Foodservice sales slipped 1% to $575 million, but operating profit climbed 22% to $101 million. International sales increased 16% to $858 million, with operating profit surging 81% to $61 million.

Operating cash flow declined to $2.2 billion from $2.9 billion a year earlier. Free cash flow totaled $1.6 billion, while long-term debt stood at $12.4 billion.

General Mills Fiscal 2027 Outlook Remains Muted

General Mills expects fiscal 2027 organic sales to range from a decline of 1.5% to growth of 0.5%.

The company forecast adjusted earnings of $3.00 to $3.20 per share, compared with analysts' estimate of $3.13. It also expects adjusted operating profit to decline 8% to 13% in constant currency.

The outlook includes headwinds from the extra 53rd week in the prior fiscal year, normalized incentive compensation and recent divestitures. Together, those factors are expected to reduce operating profit by about nine percentage points and adjusted EPS by about 11 percentage points.

General Mills said it aims to deliver $3 billion in cumulative cost savings through fiscal 2030, including $750 million in fiscal 2027, to help offset inflation, support brand investment and strengthen earnings and cash flow.

Management Sees Consumers Remaining Under Pressure

During the earnings call, executives said the company will shift its focus in fiscal 2027 from price investments to product innovation, renovation and a more favorable sales mix.

Management said consumers remain value-conscious, are buying more products on promotion and continue to shift across package sizes and retail channels.

Executives also said category demand slowed by roughly one percentage point exiting the fourth quarter and do not expect the consumer environment to improve meaningfully during fiscal 2027.

General Mills said it expects consumers to remain under financial pressure in fiscal 2027, leading shoppers to prioritize value, seek promotions and make more deliberate purchasing decisions.

The company believes value will remain the key driver of grocery spending even as it shifts its strategy toward innovation and premium offerings.

The company also flagged near-term headwinds, including first-quarter shipment timing in the Pet segment, weaker comparisons in North America Retail, the impact of yogurt divestitures and inflation outpacing cost savings early in the fiscal year.

Despite those challenges, management described the fourth quarter as a portfolio cleanup period in which the company exceeded expectations while absorbing significant noncash impairment charges tied to goodwill, brand assets and the planned Brazil divestiture.

General Mills Price Action

GIS Price Action: General Mills shares were up 8.94% at $37.91 at the time of publication on Wednesday, according to market data.