PepsiCo falls on mixed earnings, consumer weakness worries

PepsiCo (PEP) posted mixed second quarter results. The food company reported adjusted earnings per share of $2.28, topping Street estimates. However, revenue of $22.50 billion fell short of the expected $22.59 billion.

The company noted in prepared remarks that “consumers have become more value-conscious with their spending patterns and preferences.”

Morning Brief anchors Seana Smith and Brad Smith discuss PepsiCo’s results in the video above.

For more expert insight and the latest market action, click here to watch this full episode of Morning Brief.

This post was written by Stephanie Mikulich.

Video Transcript

Another stock that we’re watching this morning.

Is Pepsi shares moving to the downside?

After the company saw softer demand for its snacks and drinks here in the second quarter, you’re looking at a loss of just about 2%.

Of course, when we take a look at this print, the big question is what what this tells us about the consumer.

Clearly, it shows that consumer is still under a bit of pressure.

Consumers are cutting back on some of their spending, especially on what they are spending on snacks.

That was very evident within this report.

Also, after years and years of pricing increases and some sales growth, it does look like Pepsi.

Business might be struggling just a bit, but consumers maybe, are there is a bit of a backlash in terms of the willingness, maybe to spend on those higher prices at the moment.

We’re seeing that reflected in these results here today.

Yes, it’s amazing when you kind of look through.

And for all of the talk that we’ve heard around shr inflation, I mean it’s even made it all the way to the presidential lecterns at certain appearances and speeches that the president has given.

All of this is going to be more in focus for consumer as they’re especially trying to figure out where they’re either buying in bulk for some of the typical snack purchases that they may have made or drink and soft beverage purchases that they may have made before.

But for Pepsico, it’s also a larger, um, kind of inclination as to where they need to sell into some of their B to B clients as well to offset where the consumer pushback may be and I. I think that’s part of the calculus that this executive team, uh, really has a lot of potential work to do because even if you see more consumers saying, all right, we’re not gonna buy as much of that same product we’re not gonna stock up the pantries the same way.

But we’re also not gonna go out, and that’s gonna mean that some of the food and beverage service industry companies are not buying the same quantities.

Then you’re getting hit on both sides, both the both the restaurant and the retail side of the business, too.

Yeah, exactly.

You can see it reflected just strictly in the volume numbers you got Frida Light North America.

That volume of 4% Quaker Foods, North America, volume of 17%.

Some issues there Latin America Com Foods volume of 6% are really declined here, pointing to the fact that consumers under a bit of pressure as a result there they aren’t going out and spending some of those higher prices that many of these consumer table companies have enacted over the last several quarters.

When you talk about those price hikes, so we’re seeing a bit of a push back and as a result of volume, really heading in the wrong direction.

Big hit on Quaker Foods in North America Not as many people eating oatmeal, I guess these mornings staple in our house.

My dad, you see it every morning.

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