The Zhitong Finance App learned that Pepsi (PEP.US) will announce the results for the second quarter of 2024 before the US stock market on July 11. The market expects Pepsi's Q2 revenue to be $22.65 billion, up 1.5% year over year. Earnings per share are expected to be $2.16, compared to $2.09 for the same period last year.

Can Pepsi continue to grow despite weak consumer spending

According to data compiled by Deloitte, consumer spending continues to fall, while consumers prioritize savings to offset higher levels of inflation and higher interest rates. Despite these challenges, Pepsi's net revenue is growing year by year. The company's net revenue increased 6% year over year last year.

Pepsi cut expenses through different cost savings programs and layoffs, thereby increasing free cash flow. For example, Pepsi continues to lay off employees in the Fredley division to offset the slowdown in sales growth and maintain profit momentum. At a time when industry sales are declining, paying more attention to cash helps Pepsi to be in an ideal position to effectively manage these adverse factors.

As interest rates are lowered and inflation continues to cool, it could be a catalyst for higher consumer spending. US inflation has been falling for two consecutive months, which may give consumers a sigh of relief, which means that sales are more likely to increase. Higher spending amounts can eliminate the absolute need for continued price increases. Oversqueezing consumers may cause them to turn their attention to cheaper snack and drink categories.