PepsiCo, Inc. (NASDAQ:PEP) has announced it will cut jobs at its Westchester locations in New York. Marsha Gordon, president and CEO of the Business Council of Westchester, confirmed that PepsiCo’s layoffs in 2018 would impact about 200 employees across four Westchester locations. PepsiCo’s job losses will hit its IT and finance departments, among others leaving behind about 2,700 employees over there. These jobs cut will be a part of PepsiCo’s global reorganization. Moreover, the company’s beverage sales have also taken a beating in the recent quarterly earnings.
As per the company’s release, about one percent of PepsiCo’s global corporate workforce will be affected. “At the same time, we intend to hire tens of thousands of associates globally in 2018, from frontline to senior management, covering losses due to attrition and positions we need for growth, including hiring approximately 20,000 frontline associates in the U.S., as we do on an annual basis,” the release adds.
Gordon said Pepsi’s layoffs should not be a cause of concern for Westchester. “I think this is Pepsi doing good business, being a responsible company,” she said. “Companies need to be flexible and respond to market forces.”
PepsiCo’s Beverage Sales Decline
PepsiCo’s quarterly financial results were released on Tuesday, February 13. The company reported revenue of $19.53 billion, surpassing Wall Street’s forecast of $19.39 billion. The results were attributed to a boost in sales of the company’s snack products.
“We are broadly impressed with Pepsi’s ability to deliver bottom-line results despite the dynamic retail environment and their continued underperformance in the beverages,” said analyst Bonnie Herzog.
PepsiCo’s Frito-Lay division observed a growth of five percent in its organic sales for the quarter ended December 30. In particular, its “Cheetos” “Lay’s” products are in higher demand. On the other hand, organic sales for the North American beverage sector fell by three percent to $5.9 billion, with a 23% decline in operating profit. The products of this sector include “Pepsi,” “Mountain Dew,” “Gatorade,” and “Tropicana,” which are in less demand comparatively.
PepsiCo has been working hard to upgrade its beverage sector. In the last week, the company introduced its “Bubly” brand sparkling water, which will be available in stores by the end of February. The company has launched many other new products recently, including “LIFEWTR” bottled water. Finance chief Hugh Johnston said that more products would be coming, such as additional “Gatorade” flavors. He added that brand building is most important in the beverage business.
The decline in beverage sales might have contributed to some extent towards the PepsiCo layoffs in 2018.
“200 Pepsi layoffs confirmed in Westchester,” Lohud, February 14, 2018
“PepsiCo’s snack sales offset losses from soft drink decline,” New York Post, February 13, 2018.
“PepsiCo’s Snacks Help It Overcome Weak Soda Sales,” Yahoo Finance, February 13, 2018.