filings.toolsItem 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
INTRODUCTION
This Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) should be read in
conjunction with the MD&A included in our Annual Report on Form 10-K for the fiscal year ended May 25, 2025, for important
background regarding, among other things, our key business drivers. Significant trademarks and service marks used in our business
are set forth in italics herein. Certain terms used throughout this report are defined in the “Glossary” section below.
Our key priorities in fiscal 2026 are to return North America Retail to volume growth, accelerate North America Pet growth with an
expanded portfolio, and drive efficiencies to reinvest in growth. We expect category growth to be below our long-term projections,
reflecting less benefit from net price realization and mix amid a continued challenging consumer backdrop. To strengthen our
categories and market share performance, we plan to increase investment in consumer value, product news, innovation, and brand
building, guided by our remarkable experience framework. This included a significant strategic investment to launch Blue Buffalo into
the fast-growing United States fresh pet food sub-category in calendar 2025. We expect the combination of these growth investments,
input cost inflation, and normalization of corporate incentive will outpace expected Holistic Margin Management cost savings of 5
percent of cost of goods sold, savings from our global transformation initiative, and benefits from a 53rd week in fiscal 2026. In
addition, we expect the net impact of the divestitures of our North American yogurt businesses and the Whitebridge Pet Brands
acquisition will reduce adjusted operating profit growth by approximately 5 points in fiscal 2026.
CONSOLIDATED RESULTS OF OPERATIONS
Second Quarter Results
In the second quarter of fiscal 2026, net sales decreased 7 percent, including the net impact of the divestitures of our North American
yogurt businesses (Divestitures) and the acquisition of Whitebridge Pet Brands (Acquisition). Organic net sales decreased 1 percent
compared to the same period last year. Operating profit decreased 32 percent to $728 million, including the net impact of the
Divestitures and Acquisition, primarily driven by a decrease in contributions from volume growth, higher input costs, and higher
restructuring, transformation, and impairment charges, partially offset by favorable net price realization and mix. Operating profit
margin of 15.0 percent decreased 560 basis points. Adjusted operating profit of $848 million decreased 20 percent on a constant-
currency basis, including the net impact of the Divestitures and Acquisition, primarily driven by a decrease in contributions from
volume growth and higher input costs, partially offset by favorable net price realization and mix. Adjusted operating profit margin
decreased 290 basis points to 17.4 percent. Diluted earnings per share of $0.78 decreased 45 percent in the second quarter of fiscal
- Adjusted diluted earnings per share of $1.10 decreased 21 percent on a constant-currency basis compared to the second quarter
of fiscal 2025. See the “Non-GAAP Measures” section below for a description of our use of measures not defined by GAAP.
A summary of our consolidated financial results for the second quarter of fiscal 2026 follows:
| Quarter Ended Nov. 23, 2025 | In millions, except per share | Quarter Ended Nov. 23, 2025 vs. Nov. 24, 2024 | Percent of Net Sales | Constant- Currency Growth (a) | |||
| Net sales | $4,860.8 | (7)% | |||||
| Operating profit | 728.0 | (32)% | 15.0% | ||||
| Net earnings attributable to General Mills | 413.0 | (48)% | |||||
| Diluted earnings per share | $0.78 | (45)% | |||||
| Organic net sales growth rate (a) | (1)% | ||||||
| Adjusted operating profit (a) | 847.7 | (20)% | 17.4% | (20)% | |||
| Adjusted diluted earnings per share (a) | $1.10 | (21)% | (21)% |
(a)See the “Non-GAAP Measures” section below for our use of measures not defined by GAAP.
Consolidated net sales were as follows:
| Quarter Ended | |||||
| Nov. 23, 2025 | Nov. 23, 2025 vs. Nov. 24, 2024 | Nov. 24, 2024 | |||
| Net sales (in millions) | $4,860.8 | (7)% | $5,240.1 | ||
| Contributions from volume growth (a) | (9) pts | ||||
| Net price realization and mix | 1 pt | ||||
| Foreign currency exchange | Flat |
Note: Table may not foot due to rounding.
(a)Measured in tons based on the stated weight of our product shipments.
Net sales in the second quarter of fiscal 2026 decreased 7 percent compared to the same period in fiscal 2025, driven by a decrease in
contributions from volume growth, partially offset by favorable net price realization and mix, both of which include the net impact of
the Divestitures and Acquisition.
Components of organic net sales growth are shown in the following table:
| Quarter Ended Nov. 23, 2025 vs. | |
| Quarter Ended Nov. 24, 2024 | |
| Contributions from organic volume growth (a) | Flat |
| Organic net price realization and mix | (2) pts |
| Organic net sales growth | (1) pt |
| Foreign currency exchange | Flat |
| Acquisition and divestitures | (6) pts |
| Net sales growth | (7) pts |
Note: Table may not foot due to rounding.
(a)Measured in tons based on the stated weight of our product shipments.
Organic net sales decreased 1 percent in the second quarter of fiscal 2026 compared to the same period in fiscal 2025, driven by
unfavorable organic net price realization and mix.
Cost of sales decreased $141 million to $3,168 million in the second quarter of fiscal 2026, compared to the same period in fiscal
- The decrease was primarily driven by a $288 million decrease attributable to lower volume, partially offset by a $119 million
increase attributable to product rate and mix, both of which include the net impact of the Divestitures and Acquisition. We recorded a
$4 million net decrease in cost of sales related to the mark-to-market valuation of certain commodity positions and grain inventories in
the second quarter of fiscal 2026, compared to a $29 million net decrease in the second quarter of fiscal 2025. We recorded $3 million
of restructuring charges in cost of sales in the second quarter of fiscal 2026.
Selling, general, and administrative (SG&A) expenses decreased $10 million to $842 million in the second quarter of fiscal 2026,
compared to the same period in fiscal 2025, primarily driven by net favorable corporate investment activity. SG&A expenses as a
percent of net sales in the second quarter of fiscal 2026 increased 100 basis points compared to the second quarter of fiscal 2025.
Restructuring, transformation, impairment, and other exit costs totaled $122 million in the second quarter of fiscal 2026,
compared to $1 million in the same period last year. In the second quarter of fiscal 2026, we recorded a $53 million non-cash
impairment charge related to our Uncle Toby's brand intangible asset. We also approved a multi-year organizational initiative to
increase the competitiveness of our supply chain, and as a result, we recorded $47 million of charges in the second quarter of fiscal
- In addition, we recorded $22 million of restructuring and transformation charges in the second quarter of fiscal 2026 related to
actions previously announced (please refer to Note 3 to the Consolidated Financial Statements in Part I, Item 1 of this report).
Benefit plan non-service income totaled $16 million in the second quarter of fiscal 2026, compared to $14 million in the same period
last year, primarily driven by lower interest costs partially offset by lower expected return on plan assets.
Interest, net for the second quarter of fiscal 2026 totaled $126 million, up $1 million from the second quarter of fiscal 2025, primarily
driven by higher average long-term debt levels.
The effective tax rate for the second quarter of fiscal 2026 was 23.3 percent compared to 20.1 percent for the second quarter of fiscal
- The 3.2 percentage point increase was primarily due to unfavorable earnings mix by jurisdiction in fiscal 2026 and certain
nonrecurring discrete tax benefits in fiscal 2025. Our effective tax rate excluding certain items affecting comparability was 23.3
percent in the second quarter of fiscal 2026, compared to 20.1 percent in the same period last year (see the “Non-GAAP Measures”
section below for a description of our use of measures not defined by GAAP). The 3.2 percentage point increase was primarily due to
unfavorable earnings mix by jurisdiction in fiscal 2026 and certain nonrecurring discrete tax benefits in fiscal 2025.
The impacts of the OBBBA are reflected in our results for the quarter ended November 23, 2025, and there was no material impact to
our income tax expense. We expect certain provisions of the OBBBA will change the timing of cash tax payments in the current fiscal
year and future periods. Please refer to Note 15 to the Consolidated Financial Statements in Part I, Item 1 of the report for additional
information.
**After-tax (**loss) earnings from joint ventures for the second quarter of fiscal 2026 was a $60 million after-tax loss compared to
after-tax earnings from joint ventures of $30 million in the same period in fiscal 2025, primarily driven by our $85 million pre-tax
share of a non-cash goodwill impairment charge at Cereal Partners Worldwide (CPW) in fiscal 2026, as a result of downward
revisions of future sales and profitability estimates in the Australian market. On a constant-currency basis, after-tax loss from joint
ventures decreased 302 percent (see the “Non-GAAP Measures” section below for a description of our use of measures not defined by
GAAP).
The components of our joint ventures’ net sales growth are shown in the following table:
| Quarter Ended Nov. 23, 2025 vs. | |||||
| Quarter Ended Nov. 24, 2024 | CPW | HDJ (a) | Total | ||
| Contributions from volume growth (b) | (4) pts | (3) pts | |||
| Net price realization and mix | 3 pts | 3 pts | |||
| Net sales growth in constant currency | (1) pt | Flat | (1) pt | ||
| Foreign currency exchange | 3 pts | (2) pts | 2 pts | ||
| Net sales growth | 2 pts | (1) pt | 1 pt |
(a)Häagen-Dazs Japan, Inc. (HDJ).
(b)See the “Non-GAAP Measures” section below for our use of measures not defined by GAAP.
Average diluted shares outstanding decreased by 23 million in the second quarter of fiscal 2026 from the same period a year ago
primarily due to share repurchases.
Six-Month Results
In the six-month period ended November 23, 2025, net sales decreased 7 percent, including the net impact of the Divestitures and
Acquisition. Organic net sales decreased 2 percent compared to the same period last year. Operating profit increased 29 percent to
$2,454 million, primarily driven by a divestiture gain related to the sale of our United States yogurt business and favorable net price
realization and mix, partially offset by a decrease in contributions from volume growth, higher input costs, and higher restructuring,
transformation, and impairment charges. Operating profit margin of 26.2 percent increased 730 basis points compared to the same
period last year. Adjusted operating profit of $1,559 million decreased 19 percent on a constant-currency basis, including the net
impact of the Divestitures and Acquisition, primarily driven by a decrease in contributions from volume growth and higher input costs,
partially offset by favorable net price realization and mix. Adjusted operating profit margin decreased 250 basis points to 16.6 percent.
Diluted earnings per share of $3.00 increased 22 percent in the six-month period ended ended November 23, 2025, and adjusted
diluted earnings per share of $1.96 decreased 21 percent on a constant-currency basis compared to the same period last year (see the
“Non-GAAP Measures” section below for a description of our use of measures not defined by GAAP).
A summary of our consolidated financial results for the six-month period ended November 23, 2025, follows:
| Six-Month Period Ended Nov. 23, 2025 | In millions, except per share | Six-Month Period Ended Nov. 23, 2025 vs. Nov. 24, 2024 | Percent of Net Sales | Constant- Currency Growth (a) | |||
| Net sales | $9,378.3 | (7)% | |||||
| Operating profit | 2,453.8 | 29% | 26.2% | ||||
| Net earnings attributable to General Mills | 1,617.2 | 18% | |||||
| Diluted earnings per share | $3.00 | 22% | |||||
| Organic net sales growth rate (a) | (2)% | ||||||
| Adjusted operating profit (a) | 1,558.9 | (19)% | 16.6% | (19)% | |||
| Adjusted diluted earnings per share (a) | $1.96 | (21)% | (21)% |
(a)See the “Non-GAAP Measures” section below for our use of measures not defined by GAAP.
Consolidated net sales were as follows:
| Six-Month Period Ended | |||||
| Nov. 23, 2025 | Nov. 23, 2025 vs. Nov. 24, 2024 | Nov. 24, 2024 | |||
| Net sales (in millions) | $9,378.3 | (7)% | $10,088.2 | ||
| Contributions from volume growth (a) | (8) pts | ||||
| Net price realization and mix | 1 pt | ||||
| Foreign currency exchange | Flat |
Note: Table may not foot due to rounding.
(a)See the “Non-GAAP Measures” section below for our use of measures not defined by GAAP.
The 7 percent decrease in net sales for the six-month period ended November 23, 2025, was driven by a decrease in contributions from
volume growth, partially offset by favorable net price realization and mix, both of which include the net impact of the Divestitures and
Acquisition.
Components of organic net sales growth are shown in the following table:
| Six-Month Period Ended Nov. 23, 2025 vs. | |
| Six-Month Period Ended Nov. 24, 2024 | |
| Contributions from organic volume growth (a) | Flat |
| Organic net price realization and mix | (2) pts |
| Organic net sales growth | (2) pts |
| Foreign currency exchange | Flat |
| Acquisition and divestitures | (5) pts |
| Net sales growth | (7) pts |
Note: Table may not foot due to rounding.
(a)Measured in tons based on the stated weight of our product shipments.
Organic net sales decreased 2 percent in the six-month period ended November 23, 2025, driven by unfavorable organic net price
realization and mix.
Cost of sales decreased $315 million to $6,153 million in the six-month period ended November 23, 2025, compared to the same
period in fiscal 2025. The decrease was primarily driven by a $540 million decrease attributable to lower volume, partially offset by a
$215 million increase attributable to product rate and mix, both of which include the net impact of the Divestitures and Acquisition.
We recorded a $5 million net increase in cost of sales related to the mark-to-market valuation of certain commodity positions and
grain inventories in the six-month period ended November 23, 2025, compared to a $1 million net decrease in the six-month period
ended November 24, 2024. In addition, we recorded $5 million of restructuring charges in the six-month period ended November 23,
2025, compared to $1 million of restructuring charges in cost of sales in the same period last year (please refer to Note 3 to the
Consolidated Financial Statements in Part I, Item 1 of this report).
SG&A expenses decreased $20 million to $1,688 million in the six-month period ended November 23, 2025, compared to the same
period in fiscal 2025, primarily driven by net favorable corporate investment activity and lower other administrative costs, including
the net impact of the Divestitures and Acquisition. SG&A expenses as a percent of net sales increased 110 basis points in the six-
month period ended November 23, 2025, compared to the same period of fiscal 2025.
Divestitures gain totaled $1,054 million in the six-month period ended November 23, 2025, primarily related to the sale of our United
States yogurt business (please refer to Note 2 to the Consolidated Financial Statements in Part I, Item 1 of this report).
Restructuring, transformation, impairment, and other exit costs totaled $138 million in the six-month period ended November 23,
2025, compared to $3 million in the same period last year. In fiscal 2026, we recorded a $53 million non-cash impairment charge
related to our Uncle Toby's brand intangible asset. We also approved a multi-year organizational initiative to increase the
competitiveness of our supply chain, and as a result, we recorded $47 million of charges in fiscal 2026. In addition, we recorded $38
million of restructuring and transformation charges in the six-month period ended November 23, 2025, related to actions previously
announced (please refer to Note 3 to the Consolidated Financial Statements in Part I, Item 1 of this report).
Benefit plan non-service income totaled $31 million in the six-month period ended November 23, 2025, compared to $28 million in
the same period last year, primarily driven by lower interest costs partially offset by lower expected return on plan assets.
Interest, net for the six-month period ended November 23, 2025, increased $11 million to $259 million compared to the same period
of fiscal 2025, primarily driven by higher average long-term debt levels.
The effective tax rate for the six-month period ended November 23, 2025, was 24.9 percent compared to 20.9 percent in the same
period last year. The 4.0 percentage point increase was primarily due to certain unfavorable tax components related to the sale of our
United States yogurt business, unfavorable earnings mix by jurisdiction in fiscal 2026, and certain nonrecurring discrete tax benefits in
fiscal 2025. Our effective tax rate excluding certain items affecting comparability was 23.7 percent in the six-month period ended
November 23, 2025, compared to 20.9 percent in the same period last year (see the “Non-GAAP Measures” section below for a
description of our use of measures not defined by GAAP). The 2.8 percentage point increase is primarily due to unfavorable earnings
mix by jurisdiction in fiscal 2026 and certain nonrecurring discrete tax benefits in fiscal 2025.
The impacts of the OBBBA are reflected in our results for the six-month period ended November 23, 2025, and there was no material
impact to our income tax expense. We expect certain provisions of the OBBBA will change the timing of cash tax payments in the
current fiscal year and future periods. Please refer to Note 15 to the Consolidated Financial Statements in Part I, Item 1 of the report
for additional information.
After-tax (loss) earnings from joint ventures for the six-month period ended November 23, 2025, was a $53 million after-tax loss
compared to after-tax earnings from joint ventures of $49 million in the same period in fiscal 2025, primarily driven by our $85
million pre-tax share of a non-cash goodwill impairment charge at CPW in fiscal 2026, as a result of downward revisions of future
sales and profitability estimates in the Australian market. On a constant-currency basis, after-tax loss from joint ventures decreased
209 percent (see the “Non-GAAP Measures” section below for a description of our use of measures not defined by GAAP).
| Six-Month Period Ended Nov. 23, 2025 vs. | |||||
| Six-Month Period Ended Nov. 24, 2024 | CPW | HDJ | Total | ||
| Contributions from volume growth (a) | (4) pts | Flat | |||
| Net price realization and mix | 3 pts | 4 pts | |||
| Net sales growth in constant currency | (2) pts | 3 pts | (1) pt | ||
| Foreign currency exchange | 3 pts | 2 pts | 3 pts | ||
| Net sales growth | 1 pt | 5 pts | 2 pts |
Note: Table may not foot due to rounding.
(a)Measured in tons based on the stated weight of our product shipments.
Average diluted shares outstanding decreased by 22 million in the six-month period ended November 23, 2025, from the same
period a year ago primarily due to share repurchases.
SEGMENT OPERATING RESULTS
Our businesses are organized into four operating segments: North America Retail, International, North America Pet, and North
America Foodservice. Please refer to Note 16 of the Consolidated Financial Statements in Part I, Item 1 of this report for a description
of our operating segments.
North America Retail Segment Results
North America Retail net sales were as follows:
| Quarter Ended | Six-Month Period Ended | ||||||||||
| Nov. 23, 2025 | Nov. 23, 2025 vs. Nov. 24, 2024 | Nov. 24, 2024 | Nov. 23, 2025 | Nov. 23, 2025 vs. Nov. 24, 2024 | Nov. 24, 2024 | ||||||
| Net sales (in millions) | $2,883.3 | (13)% | $3,321.5 | $5,508.8 | (13)% | $6,338.1 | |||||
| Contributions from volume growth (a) | (16) pts | (16) pts | |||||||||
| Net price realization and mix | 3 pts | 3 pts | |||||||||
| Foreign currency exchange | Flat | Flat |
Note: Table may not foot due to rounding.
(a)Measured in tons based on the stated weight of our product shipments.
North America Retail net sales decreased 13 percent in the second quarter of fiscal 2026, compared to the same period in fiscal 2025,
driven by a decrease in contributions from volume growth, partially offset by favorable net price realization and mix, both of which
include the impact from the Divestitures.
North America Retail net sales decreased 13 percent in the six-month period ended November 23, 2025, compared to the same period
in fiscal 2025, driven by a decrease in contributions from volume growth, partially offset by favorable net price realization and mix,
both of which include the impact from the Divestitures.
The components of North America Retail organic net sales growth are shown in the following table:
| Quarter Ended | Six-Month Period Ended | ||
| Nov. 23, 2025 | Nov. 23, 2025 | ||
| Contributions from organic volume growth (a) | 1 pt | Flat | |
| Organic net price realization and mix | (4) pts | (4) pts | |
| Organic net sales growth | (3) pts | (4) pts | |
| Foreign currency exchange | Flat | Flat | |
| Divestitures (b) | (10) pts | (9) pts | |
| Net sales growth | (13) pts | (13) pts |
Note: Table may not foot due to rounding.
(a)Measured in tons based on the stated weight of our product shipments.
(b)Divestiture of the United States yogurt business in the first quarter of fiscal 2026 and the Canada yogurt business in the third quarter of fiscal
- Please refer to Note 2 to the Consolidated Financial Statements in Part I, Item 1 of this report.
North America Retail organic net sales decreased 3 percent in the second quarter of fiscal 2026, compared to the same period in fiscal
2025, driven by unfavorable organic net price realization and mix, partially offset by an increase in contributions from organic volume
growth.
North America Retail organic net sales decreased 4 percent in the six-month period ended November 23, 2025, compared to the same
period in fiscal 2025, driven by unfavorable organic net price realization and mix.
North America Retail net sales percentage change by operating unit are shown in the following table:
| Quarter Ended | Six-Month Period Ended | ||
| Nov. 23, 2025 | Nov. 23, 2025 | ||
| Big G Cereal & Canada (a) | (32)% | (29)% | |
| U.S. Snacks | (6)% | (7)% | |
| U.S. Meals & Baking Solutions | (1)% | (2)% | |
| Total | (13)% | (13)% |
(a)Upon completion of the United States yogurt business divestiture, the former U.S. Morning Foods and Canada operating units were combined
into a new Big G Cereal & Canada operating unit. Please refer to Note 16 to the Consolidated Financial Statements in Part I, Item 1 of this
report.
Segment operating profit decreased 21 percent to $682 million in the second quarter of fiscal 2026, including the impact of the
Divestitures, compared to $862 million in the same period in fiscal 2025, primarily driven by a decrease in contributions from volume
growth. Segment operating profit decreased 21 percent on a constant-currency basis in the second quarter of fiscal 2026, compared to
the same period in fiscal 2025 (see the “Non-GAAP Measures” section below for our use of this measure not defined by GAAP).
Segment operating profit decreased 22 percent to $1,246 million in the six-month period ended November 23, 2025, including the
impact of the Divestitures, compared to $1,608 million in the same period in fiscal 2025, primarily driven by a decrease in
contributions from volume growth and higher input costs, partially offset by favorable net price realization and mix and lower SG&A
expenses. Segment operating profit decreased 22 percent on a constant-currency basis in the six-month period ended November 23,
2025, compared to the same period in fiscal 2025 (see the “Non-GAAP Measures” section below for our use of this measure not
defined by GAAP).
International Segment Results
International net sales were as follows:
| Quarter Ended | Six-Month Period Ended | ||||||||||
| Nov. 23, 2025 | Nov. 23, 2025 vs. Nov. 24, 2024 | Nov. 24, 2024 | Nov. 23, 2025 | Nov. 23, 2025 vs. Nov. 24, 2024 | Nov. 24, 2024 | ||||||
| Net sales (in millions) | $728.9 | 6% | $690.6 | $1,489.1 | 6% | $1,407.6 | |||||
| Contributions from volume growth (a) | 4 pts | 1 pt | |||||||||
| Net price realization and mix | Flat | 3 pts | |||||||||
| Foreign currency exchange | 2 pts | 2 pts |
Note: Table may not foot due to rounding.
(a)Measured in tons based on the stated weight of our product shipments.
International net sales increased 6 percent in the second quarter of fiscal 2026, compared to the same period in fiscal 2025, driven by
an increase in contributions from volume growth and favorable foreign currency exchange impacts.
International net sales increased 6 percent in the six-month period ended November 23, 2025, compared to the same period in fiscal
2025, driven by favorable net price realization and mix, favorable foreign currency exchange impacts, and an increase in contributions
from volume growth.
The components of International organic net sales growth are shown in the following table:
| Quarter Ended | Six-Month Period Ended | ||
| Nov. 23, 2025 | Nov. 23, 2025 | ||
| Contributions from organic volume growth (a) | 4 pts | 1 pt | |
| Organic net price realization and mix | Flat | 3 pts | |
| Organic net sales growth | 4 pts | 4 pts | |
| Foreign currency exchange | 2 pts | 2 pts | |
| Net sales growth | 6 pts | 6 pts |
Note: Table may not foot due to rounding.
(a)Measured in tons based on the stated weight of our product shipments.
International organic net sales increased 4 percent in the second quarter of fiscal 2026, compared to the same period in fiscal 2025,
driven by an increase in contributions from organic volume growth.
International organic net sales increased 4 percent in the six-month period ended November 23, 2025, compared to the same period in
fiscal 2025, driven by favorable organic net price realization and mix and an increase in contributions from organic volume growth.
Segment operating profit increased 19 percent to $28 million in the second quarter of fiscal 2026, compared to $24 million in the same
period in fiscal 2025, primarily driven by favorable net price realization and mix and an increase in contributions from volume growth,
partially offset by higher SG&A expenses. Segment operating profit increased 30 percent on a constant-currency basis in the second
quarter of fiscal 2026, compared to the same period in fiscal 2025 (see the “Non-GAAP Measures” section below for our use of this
measure not defined by GAAP).
Segment operating profit increased 111 percent to $94 million in the six-month period ended November 23, 2025, compared to $45
million in the same period in fiscal 2025, primarily driven by favorable net price realization and mix, partially offset by higher SG&A
expenses. Segment operating profit increased 107 percent on a constant-currency basis in the six-month period ended November 23,
2025, compared to the same period in fiscal 2025 (see the “Non-GAAP Measures” section below for our use of this measure not
defined by GAAP).
North America Pet Segment Results
North America Pet net sales were as follows:
| Quarter Ended | Six-Month Period Ended | ||||||||||
| Nov. 23, 2025 | Nov. 23, 2025 vs. Nov. 24, 2024 | Nov. 24, 2024 | Nov. 23, 2025 | Nov. 23, 2025 vs. Nov. 24, 2024 | Nov. 24, 2024 | ||||||
| Net sales (in millions) | $660.4 | 11% | $595.8 | $1,270.4 | 8% | $1,171.9 | |||||
| Contributions from volume growth (a) | 3 pts | 2 pts | |||||||||
| Net price realization and mix | 7 pts | 6 pts | |||||||||
| Foreign currency exchange | Flat | Flat |
Note: Table may not foot due to rounding.
(a)Measured in tons based on the stated weight of our product shipments.
North America Pet net sales increased 11 percent in the second quarter of fiscal 2026, compared to the same period in fiscal 2025,
driven by favorable net price realization and mix and an increase in contributions from volume growth, both of which include the
impact of the Acquisition.
North America Pet net sales increased 8 percent in the six-month period ended November 23, 2025, compared to the same period in
fiscal 2025, driven by favorable net price realization and mix and an increase in contributions from volume growth, both of which
include the impact of the Acquisition.
The components of North America Pet organic net sales growth are shown in the following table:
| Quarter Ended | Six-Month Period Ended | ||
| Nov. 23, 2025 | Nov. 23, 2025 | ||
| Contributions from organic volume growth (a) | (2) pts | (3) pts | |
| Organic net price realization and mix | 2 pts | 1 pt | |
| Organic net sales growth | 1 pt | (2) pts | |
| Foreign currency exchange | Flat | Flat | |
| Acquisition (b) | 10 pts | 10 pts | |
| Net sales growth | 11 pts | 8 pts |
Note: Table may not foot due to rounding.
(a)Measured in tons based on the stated weight of our product shipments.
(b)Acquisition of Whitebridge Pet Brands business in fiscal 2025. Please refer to Note 2 to the Consolidated Financial Statements in Part I, Item 1
of this report.
North America Pet organic net sales increased 1 percent in the second quarter of fiscal 2026, compared to the same period in fiscal
2025, driven by favorable organic net price realization and mix, partially offset by a decrease in contributions from organic volume
growth.
North America Pet organic net sales decreased 2 percent in the six-month period ended November 23, 2025, compared to the same
period in fiscal 2025, driven by a decrease in contributions from organic volume growth, partially offset by favorable organic net price
realization and mix.
Segment operating profit decreased 12 percent to $123 million in the second quarter of fiscal 2026, including the impact of the
Acquisition, compared to $139 million in the same period in fiscal 2025, primarily driven by higher input costs and higher SG&A
expenses, partially offset by favorable net price realization and mix and an increase in contributions from volume growth. Segment
operating profit decreased 12 percent on a constant-currency basis in the second quarter of fiscal 2026, compared to the same period in
fiscal 2025 (see the “Non-GAAP Measures” section below for our use of this measure not defined by GAAP).
Segment operating profit decreased 9 percent to $236 million in the six-month period ended November 23, 2025, including the impact
of the Acquisition, compared to $259 million in the same period in fiscal 2025, primarily driven by higher input costs and higher
SG&A expenses, partially offset by favorable net price realization and mix and an increase in contributions from volume growth.
Segment operating profit decreased 9 percent on a constant-currency basis in the six-month period ended November 23, 2025,
compared to the same period in fiscal 2025 (see the “Non-GAAP Measures” section below for our use of this measure not defined by
GAAP).
North America Foodservice Segment Results
North America Foodservice net sales were as follows:
| Quarter Ended | Six-Month Period Ended | ||||||||||
| Nov. 23, 2025 | Nov. 23, 2025 vs. Nov. 24, 2024 | Nov. 24, 2024 | Nov. 23, 2025 | Nov. 23, 2025 vs. Nov. 24, 2024 | Nov. 24, 2024 | ||||||
| Net sales (in millions) | $581.8 | (8)% | $630.0 | $1,098.5 | (6)% | $1,166.2 | |||||
| Contributions from volume growth (a) | (6) pts | (4) pts | |||||||||
| Net price realization and mix | (1) pt | (1) pt | |||||||||
| Foreign currency exchange | Flat | Flat |
Note: Table may not foot due to rounding.
(a)Measured in tons based on the stated weight of our product shipments.
North America Foodservice net sales decreased 8 percent in the second quarter of fiscal 2026, compared to the same period in fiscal
2025, driven by a decrease in contributions from volume growth and unfavorable net price realization and mix, both of which include
the impact from the Divestitures.
North America Foodservice net sales decreased 6 percent in the six-month period ended November 23, 2025, compared to the same
period in fiscal 2025, driven by a decrease in contributions from volume growth and unfavorable net price realization and mix, both of
which include the impact from the Divestitures.
The components of North America Foodservice organic net sales growth are shown in the following table:
| Quarter Ended | Six-Month Period Ended | ||
| Nov. 23, 2025 | Nov. 23, 2025 | ||
| Contributions from organic volume growth (a) | (2) pts | (1) pt | |
| Organic net price realization and mix | 1 pt | 1 pt | |
| Organic net sales growth | Flat | Flat | |
| Foreign currency exchange | Flat | Flat | |
| Divestitures (b) | (7) pts | (6) pts | |
| Net sales growth | (8) pts | (6) pts |
Note: Table may not foot due to rounding.
(a)Measured in tons based on the stated weight of our product shipments.
(b)Divestiture of United States yogurt business in the first quarter of fiscal 2026 and the Canada yogurt business in the third quarter of fiscal 2025.
Please refer to Note 2 to the Consolidated Financial Statements in Part I, Item 1 of this report.
North America Foodservice organic net sales in the second quarter of fiscal 2026 and in the six-month period ended November 23,
2025, essentially matched the same periods in fiscal 2025.
Segment operating profit decreased 12 percent to $105 million in the second quarter of fiscal 2026, including the impact from the
Divestitures, compared to $118 million in the same period in fiscal 2025, primarily driven by higher input costs and a decrease in
contributions from volume growth, partially offset by favorable net price realization and mix. Segment operating profit decreased 12
percent on a constant-currency basis in the second quarter of fiscal 2026, compared to the same period in fiscal 2025 (see the “Non-
GAAP Measures” section below for our use of this measure not defined by GAAP).
Segment operating profit decreased 8 percent to $175 million in the six-month period ended November 23, 2025, including the impact
from the Divestitures, compared to $190 million in the same period in fiscal 2025, primarily driven by higher input costs and a
decrease in contributions from volume growth, partially offset by favorable net price realization and mix. Segment operating profit
decreased 8 percent on a constant-currency basis in the six-month period ended November 23, 2025, compared to the same period in
fiscal 2025 (see the “Non-GAAP Measures” section below for our use of this measure not defined by GAAP).
UNALLOCATED CORPORATE ITEMS
Unallocated corporate expense totaled $88 million in the second quarter of fiscal 2026, compared to $65 million in the same period in
fiscal 2025. In the second quarter of fiscal 2026, we recorded a $4 million net decrease in expense related to the mark-to-market
valuation of certain commodity positions and grain inventories, compared to a $29 million net decrease in expense in the same period
last year. Certain compensation and benefit related expenses increased in fiscal 2026 compared to fiscal 2025. In addition, we recorded
$3 million of restructuring charges in cost of sales in the second quarter of fiscal 2026. In the second quarter of fiscal 2026, we
recorded $3 million of integration costs primarily related to the Acquisition, compared to $2 million of integration costs during the
same period last year related to the acquisition of a pet food business in Europe. We recorded $7 million of net gains related to
valuation adjustments on certain corporate investments in the second quarter of fiscal 2026, compared to $3 million of net losses in the
second quarter of fiscal 2025. In addition, we recorded $2 million of transaction costs related to the sale of our United States yogurt
business in the second quarter of fiscal 2026, compared to $9 million of transaction costs related to the Acquisition and the
Divestitures in the same period last year.
Unallocated corporate expense totaled $214 million in the six-month period ended November 23, 2025, compared to $189 million in
the same period in fiscal 2025. In the six-month period ended November 23, 2025, we recorded a $4 million net increase in expense
related to the mark-to-market valuation of certain commodity positions and grain inventories, compared to a $1 million net decrease in
expense in the same period last year. In addition, we recorded $14 million of transaction costs related to the sale of our United States
yogurt business in the six-month period ended November 23, 2025, compared to $9 million of transaction costs related to the
Acquisition and the Divestitures in the same period last year. We recorded $5 million of restructuring charges in cost of sales in the
six-month period ended November 23, 2025, compared to $1 million of restructuring charges in cost of sales in the same period in
fiscal 2025. Certain compensation and benefit related expenses increased in the six-month period ended November 23, 2025,
compared to the same period of fiscal 2025. We recorded $7 million of net gains related to valuation adjustments on certain corporate
investments in the six-month period ended November 23, 2025, compared to $4 million of net losses related to valuation adjustments
of certain corporate investments in the same period in fiscal 2025.
LIQUIDITY AND CAPITAL RESOURCES
During the six-month period ended November 23, 2025, cash provided by operations was $1,216 million compared to $1,775 million
in the same period last year. The $559 million decrease was primarily driven by an $822 million decrease in net earnings excluding the
pretax gain on the Divestitures, which includes the related net impact of the Divestitures and Acquisition. This was partially offset by
a $102 million change in after-tax loss (earnings) from joint ventures, including a non-cash impairment charge to goodwill at CPW in
fiscal 2026 and a $98 million change in restructuring, transformation, impairment, and other exit costs (recoveries), including the non-
cash impairment charge to our Uncle Toby's brand intangible asset in fiscal 2026.
Cash provided by investing activities during the six-month period ended November 23, 2025, was $1,539 million compared to cash
used by investing activities of $306 million for the same period in fiscal 2025. In the first quarter of fiscal 2026, we completed the sale
of our United States yogurt business for $1,798 million cash. We also received an additional $6 million of cash related to a sale price
adjustment related to the sale of our Canada yogurt business. In addition, we spent $253 million on purchases of land, buildings, and
equipment in the six-month period ended November 23, 2025, compared to $301 million in the same period last year.
Cash used by financing activities during the six-month period ended November 23, 2025, was $2,434 million compared to cash
provided by financing activities of $422 million in the same period in fiscal 2025. We had $1,240 million of net debt payments in the
six-month period ended November 23, 2025, compared to $1,754 million of net debt issuances in the same period a year ago. In
addition, we paid $500 million for purchases of common stock for treasury in the six-month period ended November 23, 2025,
compared to $600 million in the same period in fiscal 2025. We paid $659 million of dividends in the six-month period ended
November 23, 2025, compared to $676 million in the same period last year.
As of November 23, 2025, we had $613 million of cash and cash equivalents in foreign jurisdictions. In anticipation of repatriating
funds from foreign jurisdictions, we record local country withholding taxes on our international earnings, as applicable. We may
repatriate our cash and cash equivalents held by our foreign subsidiaries without such funds being subject to further U.S. income tax
liability. Earnings prior to fiscal 2018 from our foreign subsidiaries remain permanently reinvested in those jurisdictions.
The following table details the credit facilities and lines of credit we had available as of November 23, 2025:
| In Millions | Borrowing Capacity | Borrowed Amount | |
| Committed credit facility expiring October 2029 | $2,700.0 | $— | |
| Uncommitted credit facilities and lines of credit | 771.8 | 16.8 | |
| Total | $3,471.8 | $16.8 |
To ensure availability of funds, we maintain bank credit lines and have commercial paper programs available to us in the United States
and Europe.
Certain of our long-term debt agreements and our credit facilities contain restrictive covenants. As of November 23, 2025, we were in
compliance with all of these covenants.
We have $1,558 million of long-term debt maturing in the next 12 months that is classified as current, including €600 million of 0.45
percent fixed-rate notes due January 15, 2026, €250 million of floating-rate notes due April 22, 2026, and €500 million of floating-rate
notes redeemable April 22, 2026. We believe that cash flows from operations, together with available short- and long-term debt
financing, will be adequate to meet our liquidity and capital needs for at least the next 12 months.
CRITICAL ACCOUNTING ESTIMATES
Our significant accounting policies are described in Note 2 to the Consolidated Financial Statements included in our Annual Report on
Form 10-K for the fiscal year ended May 25, 2025. The accounting policies used in preparing our interim fiscal 2026 Consolidated
Financial Statements are the same as those described in our Form 10-K. Please refer to Note 1 to the Consolidated Financial
Statements in Part I, Item 1 of this report for additional information.
Our critical accounting estimates are those that have meaningful impact on the reporting of our financial condition and results of
operations. These estimates include our accounting for revenue recognition, valuation of long-lived assets, intangible assets, income
taxes, and defined benefit pension, other postretirement benefit, and postemployment benefit plans. The assumptions and
methodologies used in the determination of those estimates as of November 23, 2025, are the same as those described in our Annual
Report on Form 10-K for the fiscal year ended May 25, 2025.
Our annual goodwill and indefinite-lived intangible assets impairment test was performed on the first day of the second quarter of
fiscal 2026. As a result of lower future sales and profitability projections for the business supporting our Uncle Toby’s brand
intangible asset, we determined that the fair value of the brand intangible asset was less than its book value and recorded a $53 million
non-cash impairment charge. We recorded the impairment charge in restructuring, transformation, impairment, and other exit costs in
our Consolidated Statements of Earnings. Our estimate of the fair value was determined based on a discounted cash flow model using
inputs which included our long-range cash flow projections for the business, the royalty rate, the weighted-average cost of capital rate,
and the tax rate. The fair value is a Level 3 asset in the fair value hierarchy.
All other intangible asset fair values were substantially in excess of the carrying values. In addition, while having significant coverage
as of our fiscal 2026 assessment date, the Progresso, Nudges, True Chews, and Kitano brand intangible assets had risk of decreasing
coverage. We will continue to monitor these businesses for potential impairment.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In September 2025, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2025-06,
amending the accounting for costs related to internal-use software. The ASU removes reference to software development project
stages. Additionally, the ASU requires capitalization of software costs to begin when management has authorized and committed to
funding the software and it is probable that the project will be completed and the software will be used to perform the function
intended. The requirements of the new standard are effective for annual periods beginning after December 15, 2027, and interim
periods within those annual periods, which for us is the first quarter of fiscal 2029. Early adoption is permitted and the amendments
may be applied on a prospective, retrospective, or modified basis. We are in the process of analyzing the impact on our results of
operations and financial position.
In November 2024, the FASB issued ASU 2024-03 requiring additional income statement disclosures. The ASU requires the
disaggregation of specific categories of expenses underlying the line items presented on the income statement. Additionally, the ASU
requires enhanced disclosure of selling expenses. The requirements of the ASU are effective for annual periods beginning after
December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. For us, annual reporting requirements
will be effective for fiscal 2028 and interim reporting requirements will be effective beginning with our first quarter of fiscal 2029.
Early adoption is permitted and the amendments should be applied on a prospective basis. Retrospective application is permitted. We
are in the process of analyzing the impact of the ASU on our related disclosures.
In December 2023, the FASB issued ASU 2023-09 requiring enhanced income tax disclosures. The ASU requires disclosure of
specific categories and disaggregation of information in the rate reconciliation table. The ASU also requires disclosure of
disaggregated information related to income taxes paid, income or loss from continuing operations before income tax expense or
benefit, and income tax expense or benefit from continuing operations. The requirements of the ASU are effective for annual periods
beginning after December 15, 2024, which for us is fiscal 2026. Early adoption is permitted and the amendments should be applied on
a prospective basis. Retrospective application is permitted. We are in the process of analyzing the impact of the ASU on our related
disclosures.
NON-GAAP MEASURES
We have included in this report measures of financial performance that are not defined by GAAP. We believe that these measures
provide useful information to investors, and include these measures in other communications to investors.
For each of these non-GAAP financial measures, we are providing below a reconciliation of the differences between the non-GAAP
measure and the most directly comparable GAAP measure, an explanation of why we believe the non-GAAP measure provides useful
information to investors, and any additional material purposes for which our management or Board of Directors uses the non-GAAP
measure. These non-GAAP measures should be viewed in addition to, and not in lieu of, the comparable GAAP measure.
Significant Items Impacting Comparability
Several measures below are presented on an adjusted basis. The adjustments are either items resulting from infrequently occurring
events or items that, in management’s judgment, significantly affect the year-to-year assessment of operating results.
The following are descriptions of significant items impacting comparability of our results.
Divestitures gain
Divestitures gain recorded in fiscal 2026 related to the sale of our United States yogurt business in fiscal 2026 and Canada yogurt
business in fiscal 2025. Please refer to Note 2 to the Consolidated Financial Statements in Part I, Item 1 of this report.
CPW asset impairments and transaction costs
CPW non-cash goodwill impairment charge related to the Australian market, and other asset impairment charges and transaction costs
related to certain assets held for sale recorded in fiscal 2026.
Restructuring and transformation charges
Restructuring and transformation charges related to supply chain actions and previously announced actions recorded in fiscal 2026.
Restructuring charges related to previously announced restructuring actions recorded in fiscal 2025. Please refer to Note 3 to the
Consolidated Financial Statements in Part I, Item 1 of this report.
Other intangible assets impairment
Non-cash impairment charge related to our Uncle Toby's brand intangible asset in fiscal 2026. Please refer to Note 4 to the
Consolidated Financial Statements in Part I, Item 1 of this report.
Transaction costs
Fiscal 2026 transaction costs related to the sale of our United States yogurt business. Fiscal 2025 transaction costs related to the
Whitebridge Pet Brands acquisition and the sale of our North American yogurt businesses. Please refer to Note 2 to the Consolidated
Financial Statements in Part I, Item 1 of this report.
Investment activity, net
Valuation adjustments of certain corporate investments in fiscal 2026 and fiscal 2025.
Mark-to-market effects
Net mark-to-market valuation of certain commodity positions recognized in unallocated corporate items. Please refer to Note 6 to the
Consolidated Financial Statements in Part I, Item 1 of this report.
Acquisition integration costs
Integration costs related to the Whitebridge Pet Brands acquisition in fiscal 2025 and the acquisition of a pet food business in Europe
in fiscal 2024 recorded in fiscal 2026 and fiscal 2025. Please refer to Note 2 to the Consolidated Financial Statements in Part I, Item 1
of this report.
Project-related costs
Restructuring initiative project-related costs related to previously announced restructuring actions recorded in fiscal 2025.
Organic Net Sales Growth Rates
We provide organic net sales growth rates for our consolidated net sales and segment net sales. This measure is used in reporting to
our Board of Directors and executive management and as a component of the measurement of our performance for incentive
compensation purposes. We believe that organic net sales growth rates provide useful information to investors because they provide
transparency to underlying performance in our net sales by excluding the effect that foreign currency exchange rate fluctuations,
acquisitions, divestitures, and a 53rd week, when applicable, have on year-to-year comparability. A reconciliation of these measures to
reported net sales growth rates, the relevant GAAP measures, are included in our Consolidated Results of Operations and Results of
Segment Operations discussions in the MD&A above.
Adjusted Operating Profit as a Percent of Net Sales (Adjusted Operating Profit Margin)
We believe this measure provides useful information to investors because it is important for assessing our operating profit margin on a
comparable basis.
Our adjusted operating profit margins are calculated as follows:
| Quarter Ended | |||||||
| Nov. 23, 2025 | Nov. 24, 2024 | ||||||
| In Millions | Value | Percent of Net Sales | Value | Percent of Net Sales | |||
| Operating profit as reported | $728.0 | 15.0% | $1,077.9 | 20.6% | |||
| Restructuring and transformation charges | 72.2 | 1.5% | 1.3 | —% | |||
| Other intangible assets impairment | 52.9 | 1.1% | — | —% | |||
| Transaction costs | 2.5 | 0.1% | 8.9 | 0.2% | |||
| Investment activity, net | (6.9) | (0.1)% | 2.8 | 0.1% | |||
| Mark-to-market effects | (4.0) | (0.1)% | (29.4) | (0.6)% | |||
| Acquisition integration costs | 3.1 | 0.1% | 2.3 | —% | |||
| Project-related costs | — | —% | 0.1 | —% | |||
| Adjusted operating profit | $847.7 | 17.4% | $1,064.0 | 20.3% | |||
| Six-Month Period Ended | |||||||
| Nov. 23, 2025 | Nov. 24, 2024 | ||||||
| In Millions | Value | Percent of Net Sales | Value | Percent of Net Sales | |||
| Operating profit as reported | $2,453.8 | 26.2% | $1,909.4 | 18.9% | |||
| Divestitures gain | (1,054.4) | (11.2)% | — | —% | |||
| Restructuring and transformation charges | 90.5 | 1.0% | 4.2 | —% | |||
| Other intangible assets impairment | 52.9 | 0.6% | — | —% | |||
| Transaction costs | 14.3 | 0.2% | 8.9 | 0.1% | |||
| Investment activity, net | (7.1) | (0.1)% | 3.2 | —% | |||
| Mark-to-market effects | 4.5 | —% | (0.6) | —% | |||
| Acquisition integration costs | 4.5 | —% | 3.9 | —% | |||
| Project-related costs | — | —% | 0.2 | —% | |||
| Adjusted operating profit | $1,558.9 | 16.6% | $1,929.3 | 19.1% |
Note: Tables may not foot due to rounding.
For more information on the reconciling items, see the Significant Items Impacting Comparability section above.
Adjusted Operating Profit and Related Constant-currency Growth Rate
This measure is used in reporting to our Board of Directors and executive management and as a component of the measurement of our
performance for incentive compensation purposes. We believe that this measure provides useful information to investors because it is
the operating profit measure we use to evaluate operating profit performance on a comparable year-to-year basis. Additionally, the
measure is evaluated on a constant-currency basis by excluding the effect that foreign currency exchange rate fluctuations have on
year-to-year comparability given the volatility in foreign currency exchange markets.
Our adjusted operating profit growth on a constant-currency basis is calculated as follows:
| Quarter Ended | Six-Month Period Ended | ||||||||||
| In Millions | Nov. 23, 2025 | Nov. 24, 2024 | Change | Nov. 23, 2025 | Nov. 24, 2024 | Change | |||||
| Operating profit as reported | $728.0 | $1,077.9 | (32)% | $2,453.8 | $1,909.4 | 29% | |||||
| Divestitures gain | — | — | (1,054.4) | — | |||||||
| Restructuring and transformation charges | 72.2 | 1.3 | 90.5 | 4.2 | |||||||
| Other intangible assets impairment | 52.9 | — | 52.9 | — | |||||||
| Transaction costs | 2.5 | 8.9 | 14.3 | 8.9 | |||||||
| Investment activity, net | (6.9) | 2.8 | (7.1) | 3.2 | |||||||
| Mark-to-market effects | (4.0) | (29.4) | 4.5 | (0.6) | |||||||
| Acquisition integration costs | 3.1 | 2.3 | 4.5 | 3.9 | |||||||
| Project-related costs | — | 0.1 | — | 0.2 | |||||||
| Adjusted operating profit | $847.7 | $1,064.0 | (20)% | $1,558.9 | $1,929.3 | (19)% | |||||
| Foreign currency exchange impact | Flat | Flat | |||||||||
| Adjusted operating profit growth, on a constant-currency basis | (20)% | (19)% |
Note: Table may not foot due to rounding.
For more information on the reconciling items, see the Significant Items Impacting Comparability section above.
Adjusted Diluted EPS and Related Constant-currency Growth Rate
This measure is used in reporting to our Board of Directors and executive management. We believe that this measure provides useful
information to investors because it is the profitability measure we use to evaluate earnings performance on a comparable year-to-year
basis.
The reconciliation of our GAAP measure, diluted EPS, to adjusted diluted EPS and the related constant-currency growth rates follows:
| Quarter Ended | Six-Month Period Ended | ||||||||||
| Per Share Data | Nov. 23, 2025 | Nov. 24, 2024 | Change | Nov. 23, 2025 | Nov. 24, 2024 | Change | |||||
| Diluted earnings per share, as reported | $0.78 | $1.42 | (45)% | $3.00 | $2.45 | 22% | |||||
| Divestitures gain | — | — | (1.43) | — | |||||||
| CPW asset impairments and transaction costs | 0.16 | — | 0.18 | — | |||||||
| Restructuring and transformation charges | 0.10 | 0.01 | 0.13 | 0.01 | |||||||
| Other intangible assets impairment | 0.07 | — | 0.07 | — | |||||||
| Transaction costs | — | 0.01 | 0.02 | 0.01 | |||||||
| Investment activity, net | (0.01) | — | (0.01) | — | |||||||
| Mark-to-market effects | — | (0.04) | 0.01 | — | |||||||
| Acquisition integration costs | — | 0.01 | — | 0.01 | |||||||
| Adjusted diluted earnings per share | $1.10 | $1.40 | (21)% | $1.96 | $2.47 | (21)% | |||||
| Foreign currency exchange impact | Flat | Flat | |||||||||
| Adjusted diluted earnings per share growth, on a constant-currency basis | (21)% | (21)% |
Note: Table may not foot due to rounding.
For more information on the reconciling items, see the Significant Items Impacting Comparability section above.
See our reconciliation below of the effective income tax rate as reported to the adjusted effective income tax rate for the tax impact of
each item affecting comparability.
Constant-currency After-tax (Loss) Earnings from Joint Ventures Growth Rates
We believe that this measure provides useful information to investors because it provides transparency to underlying performance of
our joint ventures by excluding the effect that foreign currency exchange rate fluctuations have on year-to-year comparability given
volatility in foreign currency exchange markets.
After-tax (loss) earnings from joint ventures growth rates on a constant-currency basis are calculated as follows:
| Percentage Change in After-Tax (Loss) Earnings from Joint Ventures as Reported | Impact of Foreign Currency Exchange | Percentage Change in After-Tax (Loss) Earnings from Joint Ventures on Constant-Currency Basis | |||
| Quarter Ended Nov. 23, 2025 | (299)% | 3 pts | (302)% | ||
| Six-Month Period Ended Nov. 23, 2025 | (207)% | 2 pts | (209)% |
Note: Table may not foot due to rounding.
Constant-currency Segment Operating Profit Growth Rates
We believe that this measure provides useful information to investors because it provides transparency to underlying performance of
our segments by excluding the effect that foreign currency exchange rate fluctuations have on year-to-year comparability given
volatility in foreign currency exchange markets.
Our segments’ operating profit growth rates on a constant-currency basis are calculated as follows:
| Quarter Ended Nov. 23, 2025 | |||||
| Percentage Change in Operating Profit as Reported | Impact of Foreign Currency Exchange | Percentage Change in Operating Profit on Constant-Currency Basis | |||
| North America Retail | (21)% | Flat | (21)% | ||
| International | 19% | (10) pts | 30% | ||
| North America Pet | (12)% | Flat | (12)% | ||
| North America Foodservice | (12)% | Flat | (12)% | ||
| Six-Month Period Ended Nov. 23, 2025 | |||||
| Percentage Change in Operating Profit as Reported | Impact of Foreign Currency Exchange | Percentage Change in Operating Profit on Constant-Currency Basis | |||
| North America Retail | (22)% | Flat | (22)% | ||
| International | 111% | 3 pts | 107% | ||
| North America Pet | (9)% | Flat | (9)% | ||
| North America Foodservice | (8)% | Flat | (8)% |
Note: Tables may not foot due to rounding.
Adjusted Effective Income Tax Rates
We believe this measure provides useful information to investors because it presents the adjusted effective income tax rate on a
comparable year-to-year basis.
Adjusted effective income tax rates are calculated as follows:
| Quarter Ended | Six-Month Period Ended | ||||||||||||||
| Nov. 23, 2025 | Nov. 24, 2024 | Nov. 23, 2025 | Nov. 24, 2024 | ||||||||||||
| In Millions (Except Per Share Data) | Pretax Earnings (a) | Income Taxes | Pretax Earnings (a) | Income Taxes | Pretax Earnings (a) | Income Taxes | Pretax Earnings (a) | Income Taxes | |||||||
| As reported | $617.8 | $143.9 | $967.1 | $194.8 | $2,225.9 | $554.8 | $1,688.9 | $352.2 | |||||||
| Divestitures gain | — | — | — | — | (1,054.4) | (276.9) | — | — | |||||||
| Restructuring and transformation charges | 72.2 | 16.6 | 1.3 | 0.3 | 90.5 | 20.9 | 4.2 | 1.0 | |||||||
| Other intangible assets impairment | 52.9 | 12.9 | — | — | 52.9 | 12.9 | — | — | |||||||
| Transaction costs | 2.5 | 0.6 | 8.9 | 2.0 | 14.3 | 3.3 | 8.9 | 2.0 | |||||||
| Investment activity, net | (6.9) | (1.5) | 2.8 | 0.6 | (7.1) | (1.6) | 3.2 | 0.7 | |||||||
| Mark-to-market effects | (4.0) | (1.0) | (29.4) | (6.7) | 4.5 | 1.0 | (0.6) | (0.1) | |||||||
| Acquisition integration costs | 3.1 | 0.7 | 2.3 | 0.5 | 4.5 | 1.0 | 3.9 | 0.9 | |||||||
| Project-related costs | — | — | 0.1 | 0.1 | — | — | 0.2 | 0.1 | |||||||
| As adjusted | $737.5 | $172.2 | $953.2 | $191.6 | $1,331.0 | $315.4 | $1,708.8 | $356.9 | |||||||
| Effective tax rate: | |||||||||||||||
| As reported | 23.3% | 20.1% | 24.9% | 20.9% | |||||||||||
| As adjusted | 23.3% | 20.1% | 23.7% | 20.9% | |||||||||||
| Sum of adjustments to income taxes | $28.3 | $(3.2) | $(239.4) | $4.6 | |||||||||||
| Average number of common shares - diluted EPS | 537.3 | 560.4 | 540.0 | 562.2 | |||||||||||
| Impact of income tax adjustments on adjusted diluted EPS | $(0.05) | $0.01 | $0.44 | $(0.01) |
Note: Table may not foot due to rounding.
(a) Earnings before income taxes and after-tax earnings from joint ventures.
For more information on the reconciling items, please see the Significant Items Impacting Comparability section above.
Glossary
AOCI. Accumulated other comprehensive income (loss).
Adjusted diluted EPS. Diluted EPS adjusted for certain items affecting year-to-year comparability.
Adjusted operating profit. Operating profit adjusted for certain items affecting year-to-year comparability.
Adjusted operating profit margin. Operating profit adjusted for certain items affecting year-over-year comparability, divided by net
sales.
Constant currency. Financial results translated to United States dollars using constant foreign currency exchange rates based on the
rates in effect for the comparable prior-year period. To present this information, current period results for entities reporting in
currencies other than United States dollars are translated into United States dollars at the average exchange rates in effect during the
corresponding period of the prior fiscal year, rather than the actual average exchange rates in effect during the current fiscal year.
Therefore, the foreign currency impact is equal to current year results in local currencies multiplied by the change in the average
foreign currency exchange rate between the current fiscal period and the corresponding period of the prior fiscal year.
Derivatives. Financial instruments such as futures, swaps, options, and forward contracts that we use to manage our risk arising from
changes in commodity prices, interest rates, foreign exchange rates, and stock prices.
Fair value hierarchy. For purposes of fair value measurement, we categorize assets and liabilities into one of three levels based on
the assumptions (inputs) used in valuing the asset or liability. Level 1 provides the most reliable measure of fair value, while Level 3
generally requires significant management judgment. The three levels are defined as follows:
Level 1:Unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2: Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in
active markets or quoted prices for identical assets or liabilities in inactive markets.
Level 3:Unobservable inputs reflecting management’s assumptions about the inputs used in pricing the asset or liability.
Free cash flow. Net cash provided by operating activities less purchases of land, buildings, and equipment.
Generally Accepted Accounting Principles (GAAP). Guidelines, procedures, and practices that we are required to use in recording
and reporting accounting information in our financial statements.
Goodwill. The difference between the purchase price of acquired companies plus the fair value of any noncontrolling interests and the
related fair values of net assets acquired.
Gross margin. Net sales less cost of sales.
Hedge accounting. Accounting for qualifying hedges that allows changes in a hedging instrument’s fair value to offset corresponding
changes in the hedged item in the same reporting period. Hedge accounting is permitted for certain hedging instruments and hedged
items only if the hedging relationship is highly effective, and only prospectively from the date a hedging relationship is formally
documented.
Holistic Margin Management (HMM). Company-wide initiative to use productivity savings, mix management, and price realization
to offset input cost inflation, protect margins, and generate funds to reinvest in sales-generating activities.
Mark-to-market. The act of determining a value for financial instruments, commodity contracts, and related assets or liabilities based
on the current market price for that item.
Net mark-to-market valuation of certain commodity positions. Realized and unrealized gains and losses on derivative contracts
that will be allocated to segment operating profit when the exposure we are hedging affects earnings.
Net price realization. The impact of list and promoted price changes, net of trade and other price promotion costs.
Noncontrolling interests. Interests of subsidiaries held by third parties.
Notional amount. The amount of a position or an agreed upon amount in a derivative contract on which the value of financial
instruments are calculated.
OCI. Other Comprehensive Income (Loss).
Organic net sales growth. Net sales growth adjusted for foreign currency translation, acquisitions, divestitures and a 53rd fiscal week,
when applicable.
Project-related costs. Costs incurred related to our restructuring initiatives not included in restructuring charges.
Reporting unit. An operating segment or a business one level below an operating segment.
SOFR. Secured Overnight Financing Rate.
Strategic Revenue Management (SRM). A company-wide capability focused on generating sustainable benefits from net price
realization and mix by identifying and executing against specific opportunities to apply tools including pricing, sizing, mix
management, and promotion optimization across each of our businesses.
Supply chain input costs. Costs incurred to produce and deliver product, including costs for ingredients and conversion, inventory
management, logistics, and warehousing.
Translation adjustments. The impact of the conversion of our foreign affiliates’ financial statements to United States dollars for the
purpose of consolidating our financial statements.
CAUTIONARY STATEMENT RELEVANT TO FORWARD-LOOKING INFORMATION FOR THE PURPOSE OF “SAFE
HARBOR” PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This report contains or incorporates by reference forward-looking statements within the meaning of the Private Securities Litigation
Reform Act of 1995 that are based on our current expectations and assumptions. We also may make written or oral forward-looking
statements, including statements contained in our filings with the Securities and Exchange Commission and in our reports to
stockholders.
The words or phrases “will likely result,” “are expected to,” “may continue,” “is anticipated,” “estimate,” “plan,” “project,” or similar
expressions identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such
statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results and
those currently anticipated or projected. We caution you not to place undue reliance on any such forward-looking statements.
In connection with the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, we are identifying important
factors that could affect our financial performance and could cause our actual results in future periods to differ materially from any
current opinions or statements.
Our future results could be affected by a variety of factors, such as: imposed and threatened tariffs by the United States and its trading
partners; disruptions or inefficiencies in the supply chain; competitive dynamics in the consumer foods industry and the markets for
our products, including new product introductions, advertising activities, pricing actions, and promotional activities of our
competitors; economic conditions, including changes in inflation rates, interest rates, tax rates, tariffs, or the availability of capital;
product development and innovation; consumer acceptance of new products and product improvements; consumer reaction to pricing
actions and changes in promotion levels; acquisitions or dispositions of businesses or assets; changes in capital structure; changes in
the legal and regulatory environment, including tax legislation, labeling and advertising regulations, and litigation; impairments in the
carrying value of goodwill, other intangible assets, or other long-lived assets, or changes in the useful lives of other intangible assets;
changes in accounting standards and the impact of critical accounting estimates; product quality and safety issues, including recalls
and product liability; changes in consumer demand for our products; effectiveness of advertising, marketing, and promotional
programs; changes in consumer behavior, trends, and preferences, including weight loss trends; consumer perception of health-related
issues, including obesity; consolidation in the retail environment; changes in purchasing and inventory levels of significant customers;
fluctuations in the cost and availability of supply chain resources, including raw materials, packaging, energy, and transportation;
effectiveness of restructuring, transformation, and cost saving initiatives; volatility in the market value of derivatives used to manage
price risk for certain commodities; benefit plan expenses due to changes in plan asset values and discount rates used to determine plan
liabilities; failure or breach of our information technology systems; foreign economic conditions, including currency rate fluctuations
and tariffs; and political unrest in foreign markets and economic uncertainty due to terrorism or war.
You should also consider the risk factors that we identify in Item 1A of Part I of our Annual Report on Form 10-K for the fiscal year
ended May 25, 2025, which could also affect our future results.
We undertake no obligation to publicly revise any forward-looking statements to reflect events or circumstances after the date of those
statements or to reflect the occurrence of anticipated or unanticipated events.
Previous: Item 1. Financial Statements. · Next: Item 3. Quantitative and Qualitative Disclosures About Market Risk.