PepsiCo surpassed Wall Street expectations for second-quarter revenue and profit, but the company's shares dipped slightly as executives warned that inflationary pressures continue to weigh on North American consumer spending. The snacks and beverages giant reported revenue of $24.18 billion, up 6.4% year-over-year and ahead of the $23.95 billion consensus. Core earnings per share came in at $2.20, compared to $2.12 a year ago.
Despite the top- and bottom-line beats, management cautioned that a recovery in its largest market will take longer than previously expected. Organic sales in PepsiCo's North American foods business declined about 2%, while food volumes were flat; the North American beverage division posted a 4% volume drop. CEO Ramon Laguarta attributed the moderation to tightening consumer budgets amid rising inflation, noting that US food and beverage category performance softened. Sharply higher gasoline prices — national average $4.56 per gallon in late May — further squeezed discretionary spending.
The company reaffirmed its full-year 2026 outlook, projecting organic revenue growth of 2% to 4% and a 4% to 6% increase in core constant-currency earnings per share. To stimulate demand, PepsiCo has implemented price cuts on key brands like Lay’s and Doritos, introduced smaller pack sizes, and refreshed flagship products including Gatorade. Still, CFO Steve Schmitt acknowledged that the North America turnaround will be “more gradual” for the remainder of the year. International markets provided a bright spot, with global food volumes up 3% and beverage volumes up 2%, driven by strength in Latin America and Europe.
