Sep 23, 2026 earnings call — Price mix and product innovation focus
Management said dollar sales improved 2 points in Q1 as innovation and price mix steps continue; inflation in Q1 was around 4% with Q4 near 6%.
Revenue $4.4B (est $4.4B) · EPS $0.75 (est $0.72)
Key quotes
"Where we're focused is really the first thing you'll see is we expect an improvement in price mix."
"And how that breaks out is $2 billion of HMM and $1 billion of transformation."
"We've increased by about 50% over the last 2 years. We've gone from 3% of net sales to 5% of net sales."
Analyst Q&A 10
Retail sales and share trends
Q (Andrew Lazar · Barclays): The analyst asked about the pace of improvement in retail takeaway (NAR) and whether retail consumption will keep improving or just stabilize. He also asked how share losses today compare to a year ago and what fixes are planned where issues remain.
A: Management said they are focused on improving dollar share and expect improvement in price mix starting in Q2. They noted a 2-point improvement in dollar sales and that most categories improved, but they are not yet back to growth and will focus on product mix, premium innovation and price pack architecture. They called out Totino's and fruit snacks as the main areas needing more work.
"Where we're focused is really the first thing you'll see is we expect an improvement in price mix." — Dana McNabb (COO)
Inflation outlook and pet inventory
Q (Peter Galbo · BofA): The analyst asked where inflation landed in Q1, how it will pace through the year, and what the exit rate might be. He also asked whether the low single-digit retailer inventory headwind in pet is conservative or if Q1 was an anomaly.
A: Management said Q1 inflation was around 4% and they expect Q1, Q2 and Q3 to be roughly similar, with Q4 around 6% based on current visibility. On pet, they said the Whitebridge acquisition produced a one-month lag that added about 1 point to pet growth (about 15 basis points to the company) and they still expect a low single-digit inventory headwind for the year as customer mix shifts to lower-inventory retailers.
"I would expect Q1, Q2, Q3 to be roughly similar and Q4 to be just a touch outside the range at around 6% based on everything in front of us right now." — Kofi Bruce (CFO)
Dog food decline and Love Made Fresh
Q (Robert Moskow · TD Cowen): The analyst asked how incremental Love Made Fresh was to the quarter and what drove the high single-digit decline in dog food — whether it was mainly Wilderness or other factors.
A: Management said the company is pleased with cat growth, treats growth, and improvement in Love Made Fresh, but their dry dog business is challenged. Life Protection Formula held with the category, while declines accelerated in Wilderness; they applied their Remarkable Experience Framework to diagnose issues and said they need to rethink product, packaging and marketing for Wilderness. Wet dog food was down about 4%, which was in line with plan.
"Wilderness is a place you will have heard on the prepared remarks where we've actually applied our Remarkable Experience Framework testing to that business to try and diagnose the challenges." — Dana McNabb (COO)
New products and margins
Q (Leah Jordan · Goldman Sachs): The analyst asked which new products or renovations are doing better than expected and what that says about consumers. She also asked what to watch for in the acceleration later in the year, including cereal details. Separately, she asked about gross margin puts and takes over the year.
A: Management said new product activity has stepped up and they increased new products by about 50% over the last 2 years, moving from 3% to 5% of net sales, with examples like protein cereals, Blasted Totino's Rolls, La Tiara and Love Made Fresh showing strong trial and repeat. They said more innovation is coming in the back half, including pet and snacks and a meat snack in EPIC. On margins, management said inflation and HMM cost savings should roughly offset over the year, but the 53rd week is a mechanical factor that will affect gross margins and an incentive comp reset will affect operating margin.
"We've increased by about 50% over the last 2 years." — Dana McNabb (COO)
Pricing plans and HMM role
Q (Christopher Carey · Wells Fargo): The analyst asked if pricing expectations changed versus the start of the year given better foodservice and pet pricing and how they plan to use pricing levers. He also asked if HMM performance can be sustained medium-term if inflation remains sticky.
A: Management said they adjusted everyday prices last year to stabilize base volume and regain household penetration, and going into fiscal '27 they will focus on positive price mix via product mix, premium innovation and price pack architecture while using all SRM levers as needed. They said HMM remains the first defense against inflation and they expect to run HMM in the high end of the 4% to 5% range over the long term, with SRM also part of how they manage and drive top-line growth.
"Well, as you know, we did a lot of work last year to adjust our everyday prices, and that was really important to stabilize our base volume and to help us get back to household penetration growth." — Dana McNabb (COO)
Marketing spend and leverage timeline
Q (Alexia Howard · Bernstein): The analyst asked how much marketing spend rose year-on-year, whether that elevated level will persist, and how media will trend through the year. She also asked about the path and timing to reach 3x net debt to EBITDA leverage.
A: Management said media was up modestly in Q1 and they expect media spend to be up low single digits for the rest of the year while modernizing marketing via a content studio, more influencer use and e-commerce readiness. On leverage, they said it will likely take a couple of years of HMM and transformation savings to return to a 3x net debt to EBITDA target, and they are currently just over 4x.
"From a media standpoint, in Q1, we were up modestly in Q1, not significantly." — Dana McNabb (COO)
Transformation and packaging plans
Q (Scott Marks · Jefferies): The analyst asked for details on transformation initiatives, specifically the new packaging facility partner and how benefits will flow over time. He also asked where price pack architecture changes are being applied beyond cereal and whether similar results were seen.
A: Management said transformation is about fitting the organization for future growth and they committed to $750 million of cost savings this fiscal year and $3 billion by fiscal '30 split between HMM and transformation. They recently signed an external partner to improve packaging innovation efficiency and pace to accelerate e-commerce growth, and they apply price pack architecture across categories with a 3-year pipeline of ideas, using tubs, cups and new formats in snacks, Pillsbury and Old El Paso.
"Part of it is the example that you just called out in terms of what do we need to stand up in order to get at growth faster." — Dana McNabb (COO)
Wheat, hedging and AI shopping
Q (Michael Lavery · Piper Sandler): The analyst asked how higher wheat costs are impacting the company, how well they are hedged, and when wheat could become a bigger pain point. He also asked how the company is prepared for AI/Agentic tools that create shopping lists and change discoverability.
A: Management said wheat is a touch higher than their inflation expectations and is part of the incremental pressure alongside freight, fuel, fats and packaging; foodservice flour pricing is index-priced and passed through, and they are about 3/4 hedged through the year. On e-commerce and Agentic commerce, they said e-commerce already drives over 20% of human food sales and 30% of pet sales, Agentic commerce could be about 20% of food sales by 2030, and the priority is making products discoverable, keeping information accurate and making products easy to buy.
"It's making sure that the information is accurate and that they're easy to buy." — Dana McNabb (COO)
Fertilizer risks and pet trends
Q (Nik Modi · RBC): The analyst asked how to think about fertilizer costs, crop choices and Super El Nino effects over the next 12–18 months. He also asked about structural pet trends (fewer big dogs, more small pets and cats) and how the company plans to manage margins and growth.
A: Management said fertilizer costs are more likely to be a headwind into planting decisions late next spring and could lead farmers to favor lower-fertilizer crops like soybeans over grains, with pressure becoming clearer into the next calendar year. On pet, management said the long-term trend is humanization, pointing to Love Made Fresh and Tiki Cat growth and treats returning to growth; they acknowledged fewer and smaller dogs short term but noted the company over-indexes to smaller dogs and has a strong cat business.
"I would expect that's how it plays out and that you'd start to see that pressure show up maybe with more clarity as we work our way through and into the calendar year next year." — Kofi Bruce (CFO)
Promo timing and pricing strategy
Q (Max Andrew Gumport · BNP Paribas): The analyst asked if consumers waiting to buy on promotion has eased since last year and whether that creates an easier comp in the second half. He also asked whether the company expects market share gains if peers raise list prices.
A: Management said lower- and middle-income consumers remain stressed and are still waiting to buy on sale; that behavior has not accelerated and is similar to the back half of last fiscal, and their guidance assumed it would continue all year. On pricing, they said last year's base price reductions restored value and penetration, they will use the Remarkability Framework to assess price-value by category, and they will favor mix as the primary lever but will also consider trade and list pricing as needed; management also emphasized non-price elements like innovation and marketing.
"When we set our guidance for this year, we assumed that, that would continue throughout the fiscal year." — Dana McNabb (COO)