PepsiCo missed quarterly earnings forecasts for the first time in at least five years in a mixed set of results on Thursday.
In the first three months of the year, earnings per share at the soft drinks and snacks supplier came in at $1.48 on an adjusted basis – compared to the $1.49 expected by Wall Street. The miss led shares to slide by almost 2.5% in early trading on Thursday.
“It is exceedingly rare to see PepsiCo results fall short of consensus expectations and while the miss was just one cent, we think it exemplifies just how challenging things are at the company today,” said Barclays analyst Lauren Lieberman.
Shares in PepsiCo have now slumped by over 20% in the past year as cash-strapped shoppers have cut back on snacks and sodas or switched to cheaper own-label products.
In the first quarter of 2025, net revenues fell by 1.8% to $17.92bn, while organic revenue – excluding acquisitions, disposals and the impact of foreign currency – rose by 1.2%. Organic volumes declined by 2%.
“Price hikes are doing the heavy lifting, with volume growth across its beloved brands like Pepsi, Gatorade, Lay’s and Doritos struggling to gain momentum,” said Aarin Chiekrie, equity analyst with Hargreaves Lansdown.
PepsiCo was “taking actions” to improve performance across and get earnings back on track, CEO Ramon Laguarta said in pre-prepared remarks to investors.
Two areas of cost-saving focus in North America would involve “optimising and right-sizing our supply chain and go-to-market footprint” and “increasing transportation and logistics efficiencies”, he revealed.
Both moves were “critical” said Lieberman, given the disappointing ROI on recent spend at its Frito-Lay snacking arm.
PepsiCo cut its earnings forecast for the year alongside the results, citing the threat of tariffs, economic uncertainty and a more cautious consumer.
The Gatorade owner now expects earnings per share to remain flat on a constant currency basis, compared with its previous expectation of a low-single-digit increase.
It still expects a low-single-digit increase in organic revenues, however.
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