PepsiCo Sees Gains but Tosses Outlook

PepsiCo (NASDAQ: PEP) announced strong sales in its first-quarter 2020 earnings report today, but decided to pull its full-year guidance as uncertainty about the future remains.

Bring on the soft drinks

PepsiCo reported a 7.7% increase in net sales during the quarter to $13.88 billion. Adjusted earnings were $1.07, a 10% increase year over year. 

Two of its snack brands, Quaker and Frito-Lay, had a 5% increase in North American organic revenue.

While the Super Bowl brought a strong beginning to the quarter, management said the end of the quarter benefited from consumers stockpiling staples.

A drink of cola.

Image source: Getty images.

Facing new challenges

Despite the strong sales, PepsiCo saw challenges in operations, as it had to increase labor and transportation costs to meet the new way of buying. Customers shifted their buying from malls, theaters, and other social gathering places to purchases at supermarkets and online.

On a positive note, customers seem to be snacking more now that they're staying in their homes.

A new outlook

PepsiCo pulled its full-year fiscal 2020 outlook since the situation is still very fluid. "The key uncertainty that we are facing is around timing and when consumers may shift back to restricted recovery and a new normal," CEO Ramon Laguarta said.

However, the company stills plans to repurchase shares worth $2 billion and to pay out $5.5 billion in dividends.

Shares of PepsiCo rose in premarket trading.

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Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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