Coke Sales Inch Back as CEO Sees ‘Many Challenges’ Still Ahead

Coca-Cola Co. sales are inching back toward normal, even as it surging virus cases could continue to muddle near-term results. “While many challenges lie ahead, our progress in the quarter gives me confidence we are on the right path,” Chief Executive Officer James Quincey said.

  • Global unit case volume was down 4% as the restaurants entertainment venues that make up about half of revenues aren’t yet back to normal. Still, that’s far better than the previous quarter when volume fell 16%. Some increase in at-home consumption has helped offset the problems in public spaces.

Key Insights

  • Coke executives said in July that the soda giant had made it through the worst of the downturn. Still, Quincey warned this summer that the global economy could take two to three years to recover. The sequential improvement is slow: The percentage decline in global unit case volume for October month-to-date remained in the low single digits.
  • The company will continue to cut down the number of products it sells, with a goal of offering about 200 master brands, a 50% reduction from the current level. Earlier this month, it said it would be dropping some lower-performing items like Tab diet soda and Zico coconut water in the U.S.
  • The company — which announced in late August that it would offer buyout packages to almost 40% of its North American workforce, followed by an unspecified number of involuntary layoffs — said those actions were “underway,” without providing a total number of impacted workers.
  • Competitor PepsiCo Inc. offered a full-year outlook when it reported results Oct. 1. Coke, however, said it couldn’t give a forecast given the virus uncertainty.

Market Reaction

  • Shares rose 1% at 7:11 a.m. before the start of regular trading in New York. They were down 9.7% through Wednesday’s close.
  • See the company’s statement here.

— With assistance by Brett Pulley

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