PepsiCo Defies North American demand Slump with Strong Third quarter Results
PURCHASE, N.Y.- October 26, 2023 – PepsiCo Inc. today reported robust third quarter sales, exceeding analyst expectations despite acknowledging weakening demand for its drinks and snacks in North America. The company’s net income decreased 11% to $2.6 billion, but adjusted earnings per share reached $2.29, surpassing the predicted $2.26.
The results come as PepsiCo navigates shifting consumer preferences and inflationary pressures, while together facing scrutiny from activist investor Elliott Investment Management. The company’s performance underscores its ability to adapt to challenging market conditions, but also highlights ongoing concerns about its North American market share and growth potential. The appointment of a new CFO signals a potential shift in financial strategy as PepsiCo prepares for continued economic uncertainty and investor pressure.
PepsiCo has been actively addressing consumer concerns about product pricing by expanding the availability of value brands like Chester’s and Santitas. Simultaneously, the company is accelerating its commitment to removing artificial colors from its product lines, including Gatorade and Cheetos. These initiatives are part of a broader strategy to maintain consumer loyalty and appeal to evolving health-conscious trends.
Elliott Investment Management, which recently acquired a $4 billion stake in PepsiCo, has publicly urged the company to streamline its portfolio and reinvest in core brands such as Mountain Dew, as well as explore opportunities in emerging categories like protein snacks. The firm also suggested refranchising PepsiCo’s North American bottlers, mirroring a move made by Coca-Cola in 2017. Elliott’s letter to the PepsiCo board last month cited a loss of market share in North American beverages and slowing growth in the food sector as key areas of concern.
Effective November 10, PepsiCo will welcome Steve Schmitt, currently the CFO of Walmart’s U.S. division, as its new chief financial officer. He will replace Jamie Caulfield, who is retiring after more than 30 years with the company and will remain in an advisory role until May 15. Shares of PepsiCo Inc. were slightly up in pre-market trading.
