MINNEAPOLIS, Minnesota: General Mills has lowered its annual sales and profit forecasts, citing weakening demand for salty snacks and pet food in North America as consumers shift towards cheaper private-label alternatives.

The maker of Cheerios and Pillsbury saw its shares drop about three percent in early trading following the announcement.

The company joins other packaged food giants—including Conagra Brands, Campbell's, and Kraft Heinz—in warning of a challenging retail environment. Price-conscious shoppers are increasingly opting for store-brand snacks while also cutting back on dining out.

Analysts reacted to the forecast revision with concern. Emarketer analyst Blake Droesch said General Mills is facing an "uphill battle," as economic uncertainty and potential tariffs continue to weigh on consumer spending.

"Even if tariffs don't materialize and consumer confidence improves, those who have turned to private label or other lower-cost alternatives are not certain to return to national brands," Droesch added.

General Mills now expects full-year organic sales to decline by 1.5 percent to two percent, a downgrade from its previous projection of flat to 1 percent growth.

The company also stated that its revised outlook does not account for any impact from the Trump administration's latest tariff actions, as their implementation timeline and scope remain unclear.

Adjusted full-year profit is now forecast to decline by seven percent to eight percent, compared to the earlier expectation of a one percent to three percent drop.

To counteract slowing sales, the Minnesota-based company said it is planning cost-cutting measures to save at least US$100 million in fiscal 2026.

For the quarter ended February 23, General Mills reported net sales of $4.84 billion, falling short of analysts' expectations of $4.96 billion, according to LSEG data.

The company attributed the weaker results to retailers' "unexpected" inventory reductions in its retail and pet food segment.

Despite the sales miss, General Mills posted adjusted earnings of $1 per share, exceeding analysts' estimates of 96 cents per share.