PepsiCo Tops Q2 Revenue, Says North America Demand Remains Weak

PepsiCo reported second-quarter revenue of $24.18 billion on Thursday, beating Wall Street estimates. The company warned that inflation and tight household budgets left demand in North America soft and its shares slipped slightly in premarket trading.

Revenue rose 6.4% from a year earlier, above analysts’ consensus of $23.95 billion. Core earnings per share were $2.20, up from $2.12 a year earlier. The company reaffirmed its full-year guidance and restated fiscal 2026 targets of 2% to 4% organic revenue growth and a 4% to 6% increase in core constant-currency earnings per share.

Overall volume growth was positive, led by international markets. Global food volumes climbed 3% in the quarter. Beverage volumes rose 2% when excluding the effects of pricing and foreign exchange.

Demand in North America lagged. Organic sales in PepsiCo’s North American foods business fell about 2%, food volumes were flat, and North American beverage volumes declined roughly 4%.

Ramon Laguarta, PepsiCo’s chief executive, said in prepared remarks that U.S. food and beverage category performance moderated as consumer budgets tightened amid rising inflationary pressures.

Executives pointed to higher household costs, including a sharp swing in oil prices after a U.S. conflict with Iran that pushed the national average gasoline price to about $4.56 per gallon in late May. PepsiCo noted elevated fuel costs contributed to consumers cutting discretionary spending during the period.

To respond to price sensitivity, the company reduced prices on products such as Lay’s and Doritos and expanded smaller pack sizes aimed at budget-conscious shoppers. PepsiCo is refreshing brands including Gatorade and Lay’s and reported steady demand for zero-sugar beverages alongside improving performance in its U.S. salty snacks business.

Chief Financial Officer Steve Schmitt warned in prepared remarks that the North America recovery will take longer than previously expected and that the company now expects a more gradual improvement in performance trends for the remainder of the year.

Shares slipped more than 1% in premarket trading after a brief rise following the earnings release. Management said it will continue to monitor consumer spending and inflation in North America as it pursues price, packaging and brand strategies to support demand.