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PepsiCo cuts outlook as its home-market problem deepens. For the majority of the last year, PepsiCo has been attempting to persuade Americans to put more Lay's, Doritos, and Pepsi products back into their shopping carts. As a result of the effort, the company has made some progress, but it's not happening fast enough. PepsiCo (PEP) cut its 2026 profit outlook on October 8 and warned that improving growth and margins in North America is taking longer than management expected, according to Reuters. As it deals with cautious customers, rising expenses, and shifting eating habits, the company is now planning another round of structural cost reductions. PepsiCo is frustrated by the fact that a large portion of the rest of the company is doing well. According to a PepsiCo statement, third-quarter net revenue rose 5.6% to $25.27 billion, while organic revenue rose 3.1%. North America remained the weakest region, despite an 8% increase in international organic revenue. PepsiCo shares nevertheless rose 3.7% Oct. 8 after the results and cost-cutting announcement. The question of whether PepsiCo has strong brands is becoming less important to investors. It obviously does. The question is how much money the company needs to spend or cut before its largest brands begin to grow more robustly domestically. PepsiCo's North America recovery is taking longer. In 2026, PepsiCo assured investors that things would get better in North America. It's getting more difficult to fulfill that promise. Despite increasing snack volumes, PepsiCo Foods North America reported somewhat lower organic revenue in the third quarter. While organic revenue decreased slightly and beverage volume decreased by 2%, the beverage business reported a 5% increase in revenue, driven primarily by acquisitions. Profitability is the more significant issue. In the third quarter, PepsiCo's overall core operating margin decreased by 35 basis points. The core operating margin of PepsiCo Foods North America decreased by 280 basis points as marketing expenditures, affordability investments, and other expenses outweighed increased volume and productivity. Beverage margins in North America decreased by 15 basis points. The challenging outcome is significant for a company that informed investors in December about its plan to generate at least 100 basis points of cumulative core operating-margin expansion over three years. The improvement in North America is taking longer than anticipated, according to PepsiCo CFO Steve Schmitt, and the company's margins will continue to be under pressure in the fourth quarter. As a result, the company lowered its core constant-currency earnings-per-share growth forecast for fiscal 2026 to 1% to 2%. Previously, PepsiCo had projected growth at the lower end of the 4% to 6% range. It now projects an annual increase in organic revenue of about 3%. Those figures explain why management is returning to costs. PepsiCo said it is identifying additional structural reductions aimed at eliminating redundancies, lowering corporate expenses, and cutting discretionary spending that is not directly tied to growth. Those actions should start taking effect in the coming months. The difficulty lies in doing so without depriving the brands of the marketing and innovation expenditures necessary to regain consumers. PepsiCo is changing what it sells while cutting what it spends. The issue facing PepsiCo goes beyond the fact that Americans no longer consume soda or snacks. The issue facing PepsiCo goes beyond the fact that Americans no longer consume soda or snacks. Customers are growing pickier about which goods are worth the cost. More Retail: Earlier this year, PepsiCo attempted to restore affordability by lowering prices on products like Lay's and Doritos by as much as 15%, according to Reuters. More recently, the company has hinted that as input costs rise, some snack prices will have to go up once more. This situation makes the balancing act uncomfortable. When prices are cut too drastically, margins suffer. If you raise them too quickly, budget-conscious consumers may choose to purchase fewer snacks or switch to store brands. The company's performance already reflects this tension. PepsiCo reported that while U.S. sales of savory and salty snacks increased during the quarter, its food margins suffered significantly due in part to investments in affordability. At the same time, PepsiCo is trying to change what sits on the shelf. The company is growing its product line to include simpler ingredients, fiber, protein, and alternative oils. According to PepsiCo, its current pipeline consists of reformulated products such as SunChips Fiber, PopCorners Protein, Quaker Protein Rice Crisps, and Doritos Protein. Those products fit a broader shift in consumer eating habits that packaged-food companies can no longer ignore. The growing use of GLP-1 weight-loss drugs is pressuring companies that relied on sugary drinks and salty snacks, according to Reuters. PepsiCo, General Mills (GIS), McCormick (MKC), and Conagra Brands (CAG) are also spending more on promotions and affordability to combat lower demand and higher costs. That means PepsiCo's turnaround requires more than trimming expenses. It also has to make its portfolio fit what consumers increasingly want to eat. PepsiCo faces a familiar problem its global growth can't hide PepsiCo CEO faces rising pressure to show results. PepsiCo is no longer operating without a clock, which has made the North America issue more crucial. Elliott Investment Management, an activist investor, acquired almost $4 billion in PepsiCo last year and advocated for improvements to the company's performance and value. Thereafter, PepsiCo announced measures to streamline operations, increase affordability, streamline its supply chain in North America, and increase profits. Since then, the business has taken noticeable action. PepsiCo has been experimenting with new products and dining occasions, decreasing expenses, and reorganizing its production and distribution network. As part of modifications to its operational network, TheStreet said in September that the firm was discontinuing production and storage activities at its long-standing bottling plant in Cheverly, Maryland. In the end, however, shareholders and activist investors are concerned about how such changes affect earnings. The decreased prognosis is important because of the uncertainty. PepsiCo's narrative is much different when it comes to other countries. The third quarter had an 8% rise in organic sales outside of North America, which is at least mid-single-digit growth for the 22nd consecutive quarter. The international core operating margin increased by 105 basis points. Because of this disparity, it is more difficult to write off North America's deficit as just a challenging global environment. David Wagner, portfolio manager at Aptus Capital Advisors, a company that holds PepsiCo shares, told Reuters that Ramon Laguarta, the company's CEO, is under more pressure. "Next couple of quarters need to show real North American inflection." RBC Capital Markets analyst Nik Modi was equally scathing of the beverage industry, stating that PepsiCo is still losing ground to Coca-Cola (KO) and Keurig Dr. Pepper (KDP). This makes the next quarters very significant for stockholders. PepsiCo has previously attempted to reduce the cost of snacks. It is investing more on innovation and advertising. It is introducing fiber and protein items, changing its supply chain, and seeking more cost savings. The next thing investors need is proof that such efforts are simultaneously generating sustained volume growth and higher profitability. There were some positive indicators in the third quarter, namely rising snack volumes in the United States and robust growth elsewhere. However, management's own directives show that the most difficult aspect of the turnaround remains unresolved. The largest obstacle facing PepsiCo, a firm whose goods fill American supermarkets, convenience shops, and kitchens, is unexpectedly local.

PEP stock looks to snap 6-week losing streak: Goldman Sachs trims price target but sees 'decade of growth' for PepsiCo. Published: Oct 09 2026, 08:15 AM IST * FB * TW * Linkdin * Whatsapp * GNFollow Us PepsiCo faces near-term margin pressures from rising costs and beverage challenges, but Goldman Sachs maintains a 'Buy' rating. * Goldman Sachs cut its price target on PepsiCo to $165 from $180, still implying 28% upside. * The firm cited stronger quarterly sales and the consumer giant's decade-long growth potential. * PepsiCo plans cost cuts to fund beverage improvements and North American food investments. PepsiCo Inc. (PEP) is looking to reverse a six-week losing streak as Goldman Sachs maintains a 'Buy' rating despite cutting its price target. Stronger third-quarter (Q3) sales and decade-long growth potential support optimism, while rising costs, margin pressure, and beverage execution challenges weigh on near-term earnings. PepsiCo stock edged 0.06% lower overnight on Thursday. The stock has gained nearly 2% so far this week. Goldman Sachs retains buy rating on PepsiCo. Goldman Sachs analyst Bonnie Herzog lowered her price target on PepsiCo to $165 from $180 but reiterated her 'Buy' recommendation, implying a 28% upside to the stock's last closing price. PepsiCo reported 3.1% organic sales growth in Q3, beating analysts' consensus estimate of 2.9%. Growth also rose from 2.4% in the previous quarter, an encouraging sign for the company's sales performance. Goldman Sachs sees room for PepsiCo to deliver average annual organic sales growth in the mid-single digits over the next decade. The firm's longer-term outlook suggests that the company could strengthen its growth path as it works through current business challenges. PepsiCo now expects organic sales growth of approximately 3% in fiscal 2026, narrowing its previous forecast of 2% to 4%. Management also slashed its outlook for constant-currency earnings per share growth to 1% to 2%, down from 4% to 6%, with growth previously expected near the lower end of that range. PepsiCo CFO flags rising costs. During the Q3 earnings call, PepsiCo CFO Stephen Schmitt said the company is spending more to boost sales while facing higher costs, a weaker product sales mix, and execution issues. "Margin performance is below where we expected it to be. Input costs are trending higher and mix has been a headwind in particular." Rather than pull back on spending, PepsiCo plans to continue funding important business initiatives. Schmitt said advertising and marketing expenditure has increased in both North America and international markets. CEO Ramon Laguarta said volume growth has fallen below the company's initial expectations, reflecting a challenging consumer environment and shortcomings in commercial execution. "Now we don't feel good about the beverage business. I think in the beverage business, as we put in our remarks, we're competing well in some platforms like hydration, like energy. We're not competing well in soft drinks. So we're putting all the urgency of the business and the focus in improving our performance in soft drinks." PepsiCo is reviewing expenses across the organization, including corporate overhead and centrally allocated costs. Laguarta said the savings will help finance investments in beverages and North American food operations. PEP stock: retail stance. On Stocktwits, retail sentiment around the stock slid to 'bullish' from 'extremely bullish'. A user said, "Initiated a starter position today. Love the dividends." Another user said, "The sell-off is based on strong earnings - and mid-to-high single-digit revenue growth - despite the current harsh environment. It's completely nonsensical. How low can it go, and for how long, while revenue grows because of tariffs and high energy prices? IDK. All I can do is buy low." PEP stock has declined over 10% year-to-date. For updates and corrections, email newsroom[at]stocktwits[dot]com.< Stay updated with all the latest Business News, including market trends, Share Market News, stock updates, taxation, IPOs, banking, finance, real estate, savings, and investments. Track daily Gold Price changes, updates on DA Hike, and the latest developments on the 8th Pay Commission. Get in-depth analysis, expert opinions, and real-time updates to make informed financial decisions. Download the Asianet News Official App from the Android Play Store and iPhone App Store to stay ahead in business. 0 Comments / 0 New

PepsiCo entered Europe's public bond market on Friday with a €1 billion ($1.12 billion) two-part deal, one day after cutting its profit outlook due to mounting costs in North America. The deal comprises a three-year tranche and a nine-year tranche, each worth €500 million. The shorter part is priced at around 60 basis points above mid-swaps, whilst the longer slice is marketed at around 105 basis points. The company lowered its earnings growth outlook on Thursday, citing weakness in both its beverage and snack businesses. Chief executive officer Ramon Laguarta said the company doesn't "feel good about the beverage business". Sales volumes of North American beverages have fallen 3% so far this year. This marks PepsiCo's second euro issuance this year.