$PEP Cuts 2026 Profit Outlook as North America Recovery Takes Longer Than Expected

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. The company lowered its core constant-currency EPS growth forecast for fiscal 2026 to 1% to 2%. It previously projected growth at the lower end of the 4% to 6% range. It now expects organic revenue growth of about 3% for the year.
Third-quarter net revenue rose 5.6% to $25.27 billion, while organic revenue rose 3.1%. International organic revenue rose 8%, while North America remained the weakest region. 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 higher volume and productivity.
PepsiCo CFO Steve Schmitt said improvement in North America is taking longer than anticipated and that margins will remain under pressure in the fourth quarter. The company is identifying additional structural cost reductions aimed at eliminating redundancies, lowering corporate expenses and cutting discretionary spending not directly tied to growth. PepsiCo shares rose 3.7% on October 8 after the results and cost-cutting announcement.
David Wagner of Aptus Capital Advisors told Reuters, "Next couple of quarters need to show real North American inflection."