General Mills’ pet segment eyes future growth amid inventory challenges 

USA – General Mills’ third-quarter financial results fell short of expectations, recording a decline in organic net sales primarily due to retailer inventory headwinds impacting its North America Pet segment. 

According to Jeff Harmening, chairman and chief executive officer of General Mills, the company, which released its financial report on March 19, attributed these challenges to a slowdown in the snacking category and unexpected reductions in retail inventory. 

For the quarter ending Feb. 23, General Mills’ North America Pet segment reported flat net sales of US$623.7 million. The segment’s contribution to total company sales declined to 16.4%, down from 20.5% in 2024. 

Organic net sales for the segment fell 5% due to reduced retailer inventory. Operating profit dropped 20% to US$102.2 million, a decline attributed to increased media investments and higher input costs.

A silver lining amid challenges 

Despite the downturn, Blue Buffalo, General Mills’ flagship pet food brand, saw pound share growth during the quarter. 

This growth was driven by substantial investment in media and retail partnerships, particularly for its Life Protection Formula (LPF) dry dog food. 

The company recently launched LPF Salmon, an on-trend protein variety designed to meet the growing demand for chicken-free options. 

Harmening noted that early distribution for the product has been strong, with promising retailer enthusiasm.

The company’s Wilderness pet food line also improved, with retail sales growth at key accounts. Introducing new grain-free varieties exceeded initial expectations, helping to strengthen the Wilderness brand’s position in the market.

A major challenge in the quarter was inventory volatility, particularly with General Mills’ largest retail partners. 

Harmening explained that pet food inventory levels have historically been more unpredictable than those in other segments, partly due to the business’s e-commerce nature. 

Inventory reductions had the most significant impact on dry pet food, leading to lower-than-expected performance.

Looking ahead, General Mills is optimistic about its recent acquisition of Whitebridge Pet Brands’ North American business, which includes the Tiki Cat brand. 

Over the past 52 weeks, retail sales of Tiki Cat wet food have surged by 19%, signaling strong momentum in the premium pet food category.

For the nine months ending Feb. 23, the North America Pet segment recorded net sales of US$1.8 billion, a modest 1% increase from the prior year. 

While operating profit rose 6% to US$360.9 million, the company acknowledged that sustaining long-term growth remains challenging.

Overall sales decline 

General Mills reported third-quarter net sales of US$4.84 billion company-wide, down 5% from US$5.09 billion in 2024. Organic net sales and operating profit also declined, reflecting lower pound volume and unfavorable pricing conditions. 

Despite these setbacks, the company remains committed to strategic investments in consumer value, media support, and in-store visibility to drive sales in the final quarter of the fiscal year.

For fiscal 2025, General Mills revised its net sales outlook, now expecting a decline of 1.5% to 2%, compared to its previous projection of flat to 1% growth. 

Adjusted operating profit is projected to decline between 7% and 8%, reflecting lower sales volumes.

Looking further ahead, General Mills aims to accelerate organic sales growth through fiscal 2026, with its Holistic Margin Management (HMM) productivity program expected to generate at least US$600 million in cost savings. 

Additionally, the company is exploring further cost-reduction initiatives to drive efficiency and fund brand investments.

“We’re focused on improving our sales growth in fiscal 2026 by stepping up our investment in innovation, brand communication, and value for consumers,” Harmening said. 

“We’ll fund that investment with another year of industry-leading HMM productivity, coupled with expected new cost-savings initiatives designed to boost our efficiency further and enable growth.”

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