The coronavirus pandemic and shutdowns weighed less on PepsiCo sales than expected in the second quarter, a hopeful note to kick off the summer earnings season for U.S. companies.
The company on Monday reported sales for the second quarter period that reflected a drop in soda sales and a rise in sales of snacks—such as Cheetos and Doritos—and Quaker Oats products—oatmeal and granola bars—as people stocked their cupboards and settled down for months of staying at home.
Net revenue fell to $15.95 billion, a three percent decline. But that was enough to beat analysts’ estimates of just $15.38 billion of sales. Shares jumped nearly 2.5 percent in trading on Monday morning.
The company’s Frito-Lay North America unit sold 7 percent more in the second quarter. Quaker Oats sales jumped 23 percent.
Revenue at Pepsi’s North America beverages unit, which makes up the largest part of the company’s sales, dropped 7 percent. The company pointed to declining sales at restaurants, movie theaters, gas stations, and sporting events due to lockdowns as weighing on sales.
The company signaled a recovery in sales at convenience stores and gas stations. Sales at restaurants, theaters, and sporting events will take longer, however.
“Our snacks and food business has performed very well, while our beverage business was challenged but continued to improve its competitive positioning,” Chief Executive Officer Ramon Laguarta said. “Consumer eating habits continue to evolve with consumers spending more time at home, which benefits the at-home breakfast, snacking and dinner occasions.”
Pepsi did not offer earnings guidance on the rest of the year but sounded positive about the rest of the year, downplaying the disruptions from coronavirus.
“As we look ahead for North America, we expect our overall business to perform well, assuming there is no large-scale disruption in economic activity or population mobility as a result of the recent surge in Covid-19 infections in many markets,” Laguarta said. “With this in mind, we expect our snacks and food businesses to remain resilient, albeit with some moderation in growth while our beverage businesses should deliver better performance during the second half of this year.”
Pepsi is one of the largest packaged food companies so analysts look to it for clues as to the health of the U.S. consumer’s financial situation.