PepsiCo Inc. said that consumers reduced their spending in the second quarter, slowing its efforts to revitalize its snack business in North America.
The manufacturer of Doritos, Lay’s and Gatorade saw a 2% drop in revenue from its North American food business and stagnant sales volume after taking steps earlier this year to cut prices by up to 15% on some brands.
“Results were muted in the quarter as U.S. food and beverage category performance moderated due to tightening consumer budgets due to rising inflationary pressures,” CEO Ramon Laguarta said in a prepared statement Thursday.
PepsiCo has been working to boost sales of its salty snacks and saw signs of an initial recovery earlier this year after cutting prices by up to 15% on medium-sized bags to win back hard-pressed consumers.
“While there have been some signs of progress, the pace of improvement has stalled due to inflationary pressures, calling into question consumers’ value for money,” he said. Nik Modi, co-head of global consumer and retail research RBC Capital Marketsin a note. He also indicated that he anticipates that PepsiCo will continue to lose market share in the beverage sector compared to its rivals Coca-Cola Co. and Keurig Dr Pepper Inc.
The company reaffirmed its full-year 2026 guidance and said it expected its lower prices to gradually help its recovery efforts. recovery at the end of the year.
“Our North American business was weaker than we anticipated in the second quarter, and we now expect a more gradual improvement in performance trends for the remainder of the year,” the CFO said. Steve Schmitt in a statement.
PepsiCo It posted adjusted earnings per share, a measure of profitability that excludes some one-time costs, of $2.20 for the quarter, slightly above analysts’ average estimate.
Recently, it has raised prices on some smaller packages. The company has also brought more products to the market with higher protein and fiber content, in response to growing consumer preference for healthier, less processed foods.
The actions of PepsiCo They fell 1.5% in pre-market trading on Thursday in New York. Shares have fallen about 1% year to date through Wednesday’s close, compared with a 9.3% rise in the index S&P 500.
