Cheerios Parent General Mills Slashes Sales Outlook. Its Stock Is Plunging.

General Mills hasn’t been eating its Wheaties.

Shares of General Mills (GIS) were down 8% in late trading Tuesday after the company behind Wheaties and Cheerios cut its full-year sales and profit forecast, citing a “challenging” consumer environment.

The company expects organic net sales to fall between 1.5% and 2% this year. In December, General Mills forecast sales could grow up to 1% this year. Adjusted earnings per share are expected to decline between 16% and 20%, compared with a prior forecast of a 10% to 15% decline.

“Weak consumer sentiment, heightened uncertainty and significant volatility have weighed on category growth and impacted consumer purchase patterns, resulting in a slower pace and higher cost of volume recovery than initially expected,” the company said in a press release on Tuesday. 

Chief Executive Officer Jeff Harmening, speaking at a conference on Tuesday, said persistent inflation, SNAP benefit reductions and geopolitical uncertainty “have led to significant consumer stress, especially for the middle- and lower-income groups.” As a result, he said, consumers are increasingly buying goods on sale, rather than at full price.

The sell-off in shares of General Mills paced broader declines for packaged food giants on Tuesday. Shares of Oreo and Ritz parent Mondelez International (MDLZ) were down 5% recently. Kraft Heinz (KHC) stock was also off 5%, while Campbell’s (CPB) dropped more than 7%.

Low- and middle-income consumers have been hit particularly hard in recent years by surging inflation and a stalled job market. By comparison, the finances of upper-income consumers with more exposure to the stock market have been buoyed by a years-long bull market. In the most recent University of Michigan Survey of Consumers, there was about a 20-point gap between the sentiment of respondents without stock holdings and those with the largest stock holdings.