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Today at a glance:
🥤 PepsiCo: Overhaul Under Pressure
🛩️ Delta Airlines: Gaining Altitude
🍺 Constellation: Better Than Feared
🌿 Tilray: Momentum Builds
1. 🥤 PepsiCo: Overhaul Under Pressure
PepsiCo’s Q3 revenue grew 3% Y/Y to $23.9 billion ($90 million beat) and adjusted EPS was $2.29 ($0.03 beat). However, organic sales rose only 1%, missing expectations, as international strength continued to mask weakness in North America. The North America beverage unit was a surprising bright spot, growing 2%, but this was offset by a disappointing 3% decline in the North America foods business, where volumes fell 4%.
The quarter’s main development came from outside the company: activist investor Elliott Investment Management has taken a ~$4 billion stake and is in discussions with management. This has added a “sense of urgency” to PepsiCo’s turnaround plans, with CEO Ramon Laguarta outlining a strategy to “aggressively optimize our cost structure” and “accelerate portfolio transformation.” The overhaul includes cutting underperforming products, launching healthier options (higher-protein, higher-fiber), and further headcount reductions at Frito-Lay. The company also announced a major leadership change, hiring Steve Schmitt from Walmart as its new CFO.
PepsiCo reaffirmed its full-year outlook for low-single-digit organic revenue growth and roughly flat core EPS, providing a floor for investors. While the underlying business challenges in North America persist, the arrival of an activist investor has lit a fire under the company’s turnaround efforts, forcing a more rapid and decisive overhaul of its portfolio and cost base.
2. 🛩️ Delta Airlines: Gaining Altitude
Delta’s momentum accelerated in Q3, with revenue rising 6% Y/Y to $16.7 billion ($120 million beat) and EPS of $1.71 ($0.19 beat). The results were driven by continued strength in premium and corporate travel, with corporate sales up 8%. Critically, the domestic main cabin business showed a rebound, with unit revenue rising 2% and reversing last quarter’s decline.