Cheerios maker General Mills Inc. offered an outlook for the fiscal year ahead that fell below investors’ expectations, projecting a lower adjusted profit as cautious consumers continue limiting their grocery expenses.

The Minneapolis-based company, which makes Progresso soup, Lucky Charms cereal and Blue Buffalo pet food, anticipates that the operating environment will continue to be volatile as value-seeking consumers feel pressured by tariffs, conflicts around the world and shifting regulations, said Chief Executive Officer Jeff Harmening in a statement.

“We’re not counting on a significant rebound in categories as we work our way through the year,” he added during a Wednesday call with analysts.

In a tough economic environment, the company sees the snacking category as “a bit more of a discretionary spend,” said Dana McNabb, group president for North America retail, on the call. “So our categories and our businesses have had a tougher time this year.”

The shares fell 3.5% at 9:52 a.m. on Wednesday in New York. The stock had fallen 16% this year through Tuesday’s close, while the S&P 500 Index gained 3.6%.

The company said fiscal year adjusted earnings per share will be down as much as 15%, and that organic sales will fall between a 1% decline and a 1% increase. The company sees a 1% to 2% hit on its cost of goods sold from tariffs, but is substituting ingredients and reformulating products to limit the impact, Chief Financial Officer Kofi Bruce said in prepared remarks.

In addition to budget-conscious consumers, the US’s largest food companies are facing a number of other challenges including the continued loss of market share to lower-cost private label brands.

General Mills is also navigating declining demand for breakfast cereal in the US while adapting its products in response to demand for healthier options. It faces a likely short-term hit from the planned sale of its yogurt business in North America. The food-maker expects a roughly five percentage point hit to operating profit growth from the yogurt sale, as well as the acquisition of Whitebridge Pet Brands.

“With current trends still under pressure, it is admittedly still challenging to have total confidence that the company’s FY26 guidance is now fully ‘de — risked,’” wrote Andrew Lazar, an analyst with Barclays, in a note to clients.

The company’s top goal for fiscal 2026 is to “restore volume-driven organic sales growth,” Harmening said. He pointed to efforts to lower prices and release new products, citing the upcoming release of fresh pet food under the Blue Buffalo brand and expansion of its protein-focused offerings.

Harmening said that this version of fresh pet food will see more success than a previous attempt in the category.

“We’re confident that we can build a profitable and growing business,” Harmening said. “But it will take a little bit of investment.”

In the most recent quarter, General Mills saw a 3% decline in organic sales, below average estimates. The firm also posted an adjusted EPS of $0.74, just above expectations.

With assistance from Elisabeth Ponsot and Keith Laing.