What are the reasons for GIS (General Mills)'s stock price correction over the past two years?

GIS (General Mills) has seen a sharp decline in its stock price over the past two years—falling from $90 to $46, a 50% loss—driven by weakening fundamentals, downward guidance revisions, cooling category demand, and valuation de-bubbling. Key Reasons: 1. Downward Guidance Revision & Weakening Growth ・ Management issued FY26 (ending May 2026) guidance of "organic sales growth of -1% to +1% and adjusted EPS down 10%–15%", significantly below market expectations—directly depressing the valuation anchor. ・ In the recently reported FY26 Q1: total revenue declined 7% (with ~4 percentage points attributable to net headwinds from acquisitions/divestitures); organic sales fell 3%. This was driven by price-investment strategies (“trading price for volume”), unfavorable pricing/structural dynamics due to category- and channel-level discounting, and adverse timing of promotions and trade spending in North American retail—leading to a notable year-on-year profit decline. 2. Deteriorating Fundamentals from Last Year Through This Year ・ FY25 full-year results showed revenue down 2% (organic down 2%) and adjusted EPS down 7%, driven by volume declines, weakening pricing/structure, and higher net interest expenses—setting the stage for continued weakness this year. ・ In FY25 Q3, a significant divergence emerged between Nielsen retail sales (-2%) and the company’s reported organic growth (-6%), primarily caused by retailer inventory destocking and timing impacts—indicating weak channel sell-through and insufficient restocking momentum. 3. Portfolio Shifts & M&A/DIVESTITURES Creating Reporting Headwinds ・ The divestiture of North American yogurt assets, along with other acquisitions and divestitures, contributed a -4 percentage point drag on “reported revenue” in FY26 Q1. While not reflecting underlying operational deterioration, this negatively impacted nominal growth rates and short-term valuation.

General Mills announced a CEO succession after nine years; the new CEO says her top priority is returning the company to profitable growth.

Looking back at outgoing CEO Jeff Harmening, Maria Henry today expressed gratitude toward him, praising his leadership for expanding General Mills’ scale and strengthening its product portfolio. Under his tenure, the company returned over $17 billion to shareholders via dividends and share repurchases, and refreshed one-third of its product portfolio—including entering the high-growth pet food category—to fuel future growth. "During nearly a decade of extraordinary and unprecedented circumstances, the company benefited greatly from Jeff’s steady and resolute leadership. We are fortunate to have Jeff continue serving as Executive Chairman of the Board to ensure a smooth transition," said Maria Henry. Harmening remarked today: "Looking ahead, I am confident Dana possesses the vision, urgency, and wisdom needed to advance the company’s next chapter. I’ve had the privilege of witnessing firsthand her ability to drive change and cultivate a high-performance culture. She is unquestionably the right leader to take the company to new heights." Interestingly, General Mills also filed a document with the SEC today disclosing the compensation arrangements for both the outgoing and incoming CEOs. The filing reveals that the Board approved an adjustment to McNabb’s compensation to reflect her promotion to Chief Executive Officer effective January 1, 2027. As CEO, McNabb will receive a base salary of $1.35 million, with an annual cash incentive target equal to 180% of her base salary. She will also receive a new annual long-term incentive award target of $2.1 million. On the same day, the Board approved an adjustment to Harmening’s compensation to reflect his continued role as Executive Chairman of the Board, effective January 1, 2027. As Executive Chairman, Harmening’s base salary will be reduced to $1.1 million, and his annual cash incentive target will be lowered to 125% of his base salary. Over Jeff Harmening’s nine-year tenure, General Mills faced extraordinary challenges—including pandemic disruptions, sharp inflation across U.S. and European markets, and shifting consumer trends. He responded through cost discipline, product innovation (e.g., emphasizing protein and fiber), brand enhancement, and portfolio restructuring. Yet, volume recovery and organic growth remained the company’s biggest hurdles. General Mills posted consecutive years of declining sales and profits and repeatedly lowered its financial guidance. During his tenure, the company’s stock price was essentially flat—or significantly underperformed both the broader market and peers—at times even falling near a 15-year low. Nonetheless, before stepping down, Harmening had largely completed the most difficult strategic initiatives. As previously reported by Xiaoshidian, major decisions at General Mills began accelerating in 2025: • In May last year, the company announced a global transformation plan, including approximately $500 million in severance costs. • In March this year, General Mills announced the sale of its Brazilian business. • In April, it announced the cessation of Blue Buffalo pet food operations in China. • In June, General Mills sold its Häagen-Dazs retail store business in mainland China to an investor group including Ningji; General Mills will retain ownership and continue operating Häagen-Dazs’ retail and foodservice businesses in China—the transaction remains pending.