Coca-Cola Sales Fall 28% but It Says the Worst Is Over -- Update
22 July 2020 - 12:19AM
Dow Jones News
By Jennifer Maloney
Coca-Cola Co. said it believes the biggest challenges of the
pandemic are behind it, despite the current surge in coronavirus
cases in many parts of the U.S.
About half of Coca-Cola's business comes from away-from-home
venues -- the restaurants, bars, movie theaters and sports stadiums
that were shut around the world during the second quarter because
of the pandemic.
But China, Southeast Asia and Western Europe have done a "pretty
good job in managing the worst stages of the pandemic" and sales
there should continue to improve, Coke's finance chief, John
Murphy, said in an interview. "Here in the U.S., we're seeing a
spike in a number of places but the degree of lockdown is not
nearly what it was."
The company's sales improved in May and June as shelter-in-place
measures eased around the world. Latin America and Africa still
present the greatest amount of uncertainty, Mr. Murphy said.
Nearly 15 million people have been infected by the virus,
including more than 2.1 million in Brazil and 3.8 million in the
U.S., according to data compiled by Johns Hopkins University.
Coca-Cola's Fairlife milk and Simply orange-juice brands have
sold well during the pandemic as people have eaten more at home.
The company's biggest soda brands -- including Coke, Coke Zero
Sugar and Sprite -- have sold well in grocery stores but have taken
a hit from a steep drop-off in soda fountain sales. Meanwhile,
smaller soda brands such as Fresca have suffered as retailers
narrowed their offerings, Mr. Murphy said.
Coca-Cola said revenue fell 28% to $7.15 billion for the quarter
ended June 26, down from $10 billion a year earlier. Organic
revenue, which excludes the effects of currency swings,
acquisitions and divestitures, dropped 26%.
Rival PepsiCo Inc. last week posted flat revenue for the latest
quarter, which ended June 13, as increased demand for its snacks
and packaged foods largely offset a decline in beverage sales.
Some U.S. states have reported a rising number of Covid-19
cases, prompting some states to take steps to try to curb the
pathogen's spread. For example, California has banned indoor dining
and movie theaters in much of the state.
Coca-Cola earlier this month said it was closing its Odwalla
juice and smoothie business, as well as its refrigerated-truck
delivery network.
The soda giant will eliminate other small, underperforming
brands around the world, Chief Executive James Quincey said in a
call with analysts Tuesday, noting that more than half of the
company's 400 brands are single-country brands with little to no
scale.
"We have not been assertive enough" in weeding them out, he
said.
For the quarter, Coca-Cola recorded earnings of $1.78 billion,
or 41 cents a share, down from $2.61 billion, or 61 cents a share,
in the comparable quarter last year. Adjusted earnings were 42
cents a share, ahead of the 40 cents a share analysts had
expected.
Coca-Cola is shifting marketing spending to its biggest brands
and during the pandemic has pulled the plug on small R&D
projects, Mr. Murphy said. Last week, the company said it was
updating its Freestyle fountain machines to allow consumers to use
their phones to pour soda instead of touching a screen.
The company, like many big brands, has paused social-media
advertising for July to review its policy amid a national reckoning
over racial justice after the killing of George Floyd by
Minneapolis police. The company said it has committed to spend an
incremental $500 million with Black-owned suppliers over the next
five years in the U.S.
Dave Sebastian contributed to this article.
Write to Jennifer Maloney at jennifer.maloney@wsj.com
(END) Dow Jones Newswires
July 21, 2020 10:04 ET (14:04 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
Coca Cola (NYSE:KO)
Historical Stock Chart
From Apr 2024 to May 2024
Coca Cola (NYSE:KO)
Historical Stock Chart
From May 2023 to May 2024