General Mills shares fell 3.6% on Monday, extending a three-year slide that has reduced the stock’s value by over 60%. Shares are now nearing their lowest close since August 2010. The ongoing selloff highlights the ongoing challenges the company faces. At present, there is little indication that the trend will change in the short term.
General Mills faces both short-term and long-term challenges. The company has raised prices several times to address higher ingredient, shipping, and labor costs. This boosted revenue for a while. However, it also led some shoppers to switch to more affordable store brands. Some of these customers have not yet returned. As a result, the company’s ability to further increase prices and maintain profits is now more limited.
Another challenge is that more people want fresher, less-processed, and higher-protein foods. Packaged food brands like General Mills face increased competition in these areas. The company has begun updating its products and lineup, although these efforts may take time to impact sales. Increasing spending on promotions could help regain shelf space from store brands, although it could also put further pressure on profits, which are already affected by higher costs.
The forecast for fiscal 2026, which ends in May, reflects ongoing challenges. General Mills expects organic sales to decline by 1.5% to 2%, and adjusted earnings to decrease by 16% to 20%. With both sales and profits facing downward pressure, supporting the current stock price may be a concern.
General Mills is not the only company facing these problems. Stocks of other packaged food companies, such as Campbell’s, Conagra, Kraft Heinz, and J.M. Smucker, are also trading at their lowest levels in over 10 years. They are about 40% cheaper than the S&P 500. This low pricing may be fair, given the slow U.S. population growth. For sales to recover, people would need to change their eating habits or go back to buying more shelf-stable foods. These companies would also need to gain more market share. None of these changes seems likely soon. For traders, the main issue with General Mills is not the price. It is the lack of any clear reason for the decline to stop.
