PepsiCo Reports Mixed Results as Consumers ‘Become More Value-Conscious’

PepsiCo (PEP) shares slipped in intraday trading Thursday after the company delivered mixed second-quarter results and lowered its full-year organic growth outlook.

The food and beverage giant posted adjusted earnings per share (EPS) of $2.28 on revenue of $22.5 billion, compared with an analysts’ consensus estimates of adjusted EPS of $2.15 on revenue of $22.6 billion. 

Chief Executive Officer (CEO) Ramon Laguarta acknowledged a “subdued category performance within North America.” PepsiCo’s Frito-Lay North America division saw volume decline 4% year-over-year, its North American beverage unit volume fall 3%, and its Quaker Foods North America volume dip 17%. 

‘Consumers Have Become More Value-Conscious’

In prepared remarks, PepsiCo management discussed the impact of rising costs on consumers’ ability to spend.

“The impacts of persistent inflationary pressures and higher borrowing costs over the last few years have resulted in tighter household financial conditions,” the executives said. “Accordingly, the year-to-date performance across many food categories, including snacks, has been subdued and consumers have become more value-conscious with their spending patterns and preferences across brands, packages, and channels.”

Looking ahead, Pepsi now projects full-year organic revenue growth of about 4%, compared to its prior estimate of “at least 4%.” The company continues to expect adjusted EPS of at least $8.15, which would be a 7% increase from 2023. 

Shares of PepsiCo slipped 1% to $162.03 as of 10:40 a.m. ET Thursday. They are down about 4.5% this year.