Coca-Cola Sales Slide as Pandemic Progresses -- Update
April 21 2020 - 9:49AM
Dow Jones News
By Jennifer Maloney
Coca-Cola Co. said its global sales volume has fallen 25% since
the beginning of April amid pandemic lockdowns, and cautioned that
consumer spending won't immediately bounce back as countries begin
to reopen.
"We may be at the end of the big global lockdown, but we are
still a long way from the new normal," Chief Executive James
Quincey said on a call with analysts Tuesday.
In China, where Coke's plants are running and employees have
returned to company offices in Shanghai, there are still limits on
crowd sizes, and consumption is down from last year, Mr. Quincey
said. And other places such as Tokyo are implementing a second
round of restrictions, he noted.
About half of Coca-Cola's business is generated by
away-from-home retail channels -- the restaurants, bars, movie
theaters and sports stadiums that have been shut world-wide. The
company has also seen a decline in on-the-go drinks typically sold
in convenience stores, Mr. Quincey said.
As economies enter a phase of graduated reopenings, consumers
will continue to lean heavily on e-commerce because of "the specter
of the virus over us," Mr. Quincey said. He said he also expects to
see "a very profound theme of affordability," as shoppers brace for
an economic downturn. The company expects the sharpest impact on
its sales in the second quarter of this year.
Coke has cut marketing and capital spending and has put some
employees on paid furlough through June. Executives said they are
focusing on supplying grocery stores with core brands to help them
simplify their supply chains. And the beverage giant is canceling
smaller projects in its R&D pipeline to focus resources on
developing products that could scale more easily, Mr. Quincey
said.
The soda giant, whose brands include Dasani water, Costa coffee
and Powerade, reported lower revenue for the March-ended quarter,
with sales down 1% to $8.6 billion. The Atlanta company said
organic revenue, which excludes the effect of currency swings,
acquisition and divestitures, was flat.
For the quarter, Coca-Cola reported earnings of $2.76 billion,
compared with $1.68 billion in the comparable quarter last year.
Adjusted earnings were 51 cents a share, ahead of the 44 cents
analysts had expected.
Unit-case volume for its sparkling soft drinks, which include
its namesake soda, Diet Coke, Fanta and Sprite, fell 2% for the
quarter, led by a decline in Asia Pacific, particularly China.
--Dave Sebastian contributed to this article.
Write to Jennifer Maloney at jennifer.maloney@wsj.com
(END) Dow Jones Newswires
April 21, 2020 09:34 ET (13:34 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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