PepsiCo CFO: ‘The U.S. Consumer Is Actually A Bright Spot’
PepsiCo (PEP) - Get Report had some caffeine behind its first-quarter earnings. The beverage and snacks giant Monday reported total revenue fell 3% year over year to $11.9 billion, matching Wall Street forecasts. Excluding the impact of the strong U.S. dollar, which hurt sales by 4.5 percentage points, sales rose 3.5%. Earnings per share, excluding one-time items, came in at 89 cents, topping estimates for 81 cents. Frito-Lay North America saw organic revenue and operating profit increase 4% and 10%, respectively. Meantime, the North America beverage business was able to overcome sluggish soda sales and deliver respective revenue and profit increases of 2% and 7%, respectively, vs. the prior year. In spite of weak retail sales in the U.S. and profit warnings from retailers such as Gap (GPS) - Get Report so far this year, PepsiCo says the U.S. consumer was a bright spot in the first quarter. 'We are looking at the U.S. consumer pretty positively, I always look at convenience stores which tell me what's happening with a broad base of consumers - convenience store sales were about 5% as a category and we gained market share,' said PepsiCo vice chairman and CFO Hugh Johnston in an interview with TheStreet. Surprising resilience on the part of the U.S. consumer may be needed this year to help counteract more tepid economic growth around the world. Said Johnston, 'There are two challenging places around the world right now in particular, one is South America, which is going through its ups and downs - when I say South America I am not saying Mexico which is doing quite well, but the balance of South America is certainly facing some challenges.' He added, 'The second area where things are a bit more challenging is Eastern Europe, in particular Russia.' PepsiCo's caution on the global growth environment is part of the reason why it reiterated its earnings outlook for the year of $4.66 a share, despite an impressive first quarter beat. In addition to overseeing PepsiCo's financials, Johnston has a new job on his hands having recently joined Twitter's (TWTR) - Get Report board of directors. 'Since I haven't been to my first board meeting yet, it's pre-mature for me to comment on the company's strategy,' said Johnston when asked what he thinks Twitter needs at this point in its lifecycle. 'I think Twitter is a terrific business, and that it's best days are in front of it.'
