What happened
PepsiCo plans to reduce about 1,000 jobs across its North American business over the next week, part of a push to simplify how it operates and tighten coordination across teams. In a Monday letter to employees, Ram Krishnan, CEO of PepsiCo North America, wrote, "We have a clear ambition for PepsiCo North America: to build a stronger, more future-fit business that delivers industry-leading growth." He said the business needs to move faster, be more connected and more capable, and keep investing in growth behind its people, capabilities and brands.
Why the cuts now
PepsiCo signaled pressure in its home market in October when it lowered its full-year earnings outlook. In the third quarter, volume fell 2 percent in its North American beverage unit, and the North American food division posted flat volume.
The company has tried to reignite sales by cutting prices and ramping up marketing. During the earnings call, Chief Financial Officer Steve Schmitt acknowledged that progress on the turnaround has been slower than anticipated.
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What it means for investors
According to a company filing, as of Dec. 27 PepsiCo's worldwide headcount stood near 306,000, with about 125,000 of those employees based in the United States. Shares rose slightly in afternoon trading, but the stock remains down nearly 1 percent this year, trailing the S&P 500's nearly 11 percent gain over the same stretch.
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