PepsiCo has revised its full-year revenue outlook downward after reporting weaker-than-expected sales for the fiscal third quarter, despite earnings that beat Wall Street estimates.
The food and beverage giant, known for its brands like Quaker, Frito-Lay, and Pepsi, cited slowing demand in key North American markets and a significant product recall as major factors behind the decline.
The company, based in Purchase, New York, lowered its forecast for organic revenue growth, now expecting an increase in the low single-digit range, down from the previously anticipated 4%. Organic revenue adjusts for factors like currency fluctuations and the impact of acquisitions or divestments.
In North America, performance was particularly sluggish. PepsiCo’s Quaker Foods business faced sales pressure due to a large-scale recall of its granola bars and cereals. Frito-Lay North America, which includes popular snack brands, saw a 1.5% dip in sales volume, while beverage volumes also fell by 3%.
PepsiCo acknowledged that US consumers have been pulling back on purchases, particularly as they push back against rising prices. In response, the company has promised to lower the cost of some products, such as potato chips and tortilla chips, after years of price hikes. For the third quarter, Frito-Lay’s prices rose by only 0.5%, signaling a shift in strategy.
Internationally, PepsiCo saw more positive results, with prices rising by 3%, although sales volumes declined in most markets except Europe.
The company reported flat revenue of $23.3 billion for the quarter, below analysts’ expectations of $23.8 billion. Net income fell 5% to $2.9 billion, or $2.13 per share. However, adjusted earnings were $2.31 per share, slightly above the forecast of $2.29 per share.
As a result of the softer revenue outlook, PepsiCo shares dropped 1% in premarket trading.
CNBC and the Associated Press contributed to this report.
