PepsiCo said Thursday that its first-quarter revenue rose 8.5% to $19.44 billion as price cuts on chips and other snacks helped drive more shoppers to its shelves. The company also said net income climbed 27% to $2.33 billion in the January-March period, topping Wall Street expectations on both sales and profit.
The results beat analysts’ forecast of $18.95 billion in revenue and $1.54 per share in adjusted earnings. On an adjusted basis, PepsiCo earned $1.61 per share. Shares were flat in premarket trading.
The company began cutting prices on value brands such as Chester’s and Santitas last spring, then said in February it would slash prices on Lay’s, Doritos, Cheetos and Tostitos chips by up to 15%. At a Michigan Walmart on Thursday, a 9.25-ounce bag of Doritos carried a rollback tag of $3.97, down from $4.48, a sign that the discounts are reaching store shelves.
PepsiCo had been under pressure from Elliott Investment Management to accelerate the price cuts, and it agreed to move faster. The company also said newer products are helping, including Cheetos NKD and Doritos NKD, along with snacks with enhanced ingredients such as Smartfood FiberPop and Doritos Protein. Those launches are aimed at drawing shoppers at a time when packaged food makers are still fighting for traffic and price-sensitive consumers.
The quarter gives PepsiCo a cleaner read on how far its pricing reset is helping. The combination of lower prices and fresh products is lifting demand now, but the company still has to prove it can keep that momentum without giving up too much revenue later in the year.