PepsiCo’s (NASDAQ: PEP) snacks got cheaper in North America this year, on the company’s own net pricing measure, and savory snack volume rose 1% in the third quarter of 2026, yet the business that sells them earned 12% less on the company’s own “core” measure of operating profit. On October 8, 2026 the company cut its outlook for the year, citing pressure on profit margins in its North America business, and it now expects core earnings per share to grow 2.5% to 3.5% where it had pointed to the low end of 5% to 7%. The results also include $178 million of tariff refunds, and by our calculation PepsiCo’s core operating profit would have been about flat without them.
- Snack volume rose as prices fell, and core profit dropped 12%
- Tariff refunds are holding up the rest of the profit
- PepsiCo now expects to earn less this year than it planned
- Other big food companies are still raising prices
- The headline numbers look better than the business underneath
- More cost cuts are coming, with no number attached yet
- Signals that would show the story turning
- Frequently asked questions
Snack volume rose as prices fell, and core profit dropped 12%
People in North America are buying more PepsiCo snacks again, and the company is earning less from selling them. The business is called PepsiCo Foods North America, and it sells brands such as Doritos, Cheetos and Quaker. In the 12 weeks ended September 5, 2026, its savory snack volume rose 1%, according to the company’s quarterly report on Form 10-Q, while volume in its other foods fell 4%.
The price side went the other way. PepsiCo reports a figure it calls effective net pricing, which is the year-over-year effect on sales of price changes, discounts and promotions and the mix of pack sizes, and in this business it took 1 point off sales growth while volume added half a point. Revenue ended almost flat at $6,504 million, and operating profit on PepsiCo’s core measure (its own version of profit, which leaves out items such as restructuring costs) fell to $1,382 million from $1,570 million a year earlier, per the results release. That is a drop of $188 million, or 12%.
The chart shows how new this is. In PepsiCo’s quarterly releases, the volume of this business fell in all eight quarters of 2024 and 2025, a stretch when its prices were still rising or holding. In 2026 the pattern flipped, so volume has been up or flat in each of the three quarters and net pricing has been negative in each of them. Affordability was a stated tactic. The company’s December 2025 outlook release promised “sharper everyday value through a targeted approach on affordable price tiers by brand and channel.”
Profit kept sliding while the shoppers returned. The business’s core operating profit has fallen against the prior year in every quarter since the start of 2025, and in 2026 the declines have widened from 4% to 8% to 12%. For every $100 of snacks and foods sold in the quarter it kept about $21.20 as core operating profit, where a year earlier it kept about $24.10 (our division of the release’s figures).
It would be too strong to put the whole decline on cheaper prices, and PepsiCo does not say how much of it belongs to them. The company’s prepared management remarks say the margin “declined 280 basis points reflecting the impact of affordability investments, the lap of an asset sale gain in the prior year quarter and higher advertising and marketing investments, partially offset by productivity savings and an increase in organic volume.” The 10-Q adds higher commodity costs to that list. It also says last year’s quarter included gains on asset sales worth 4 points of the business’s reported operating profit, which we put at about $61 million, an estimate from a rounded figure.
Management’s case is that the plan is working on the demand side. The remarks say that “year-to-date household penetration, purchase frequency and velocity trends have improved as the innovation and affordability initiatives have resonated well with consumers.” They are also plain about the result so far, saying that “Our business in North America performed below our expectations.”
Tariff refunds are holding up the rest of the profit
PepsiCo’s profit growth in the quarter was smaller than the tariff refunds it received, so on our calculation core operating profit would have been about flat, or slightly lower, without them. For the whole company, core operating profit was $4,277 million against $4,137 million a year earlier, a rise of $140 million. The prepared remarks state in the finance chief’s commentary that “Tariff refunds amounted to $178 million in the third quarter.”
Subtract the refunds and core operating profit comes to $4,099 million, about 1% below last year. That is our adjustment and the company does not publish it. It is also one-sided, because last year’s quarter had the asset-sale gain described above. Take our $61 million estimate of that gain out of last year as well and the comparison becomes $4,099 million against about $4,076 million, a rise of roughly 0.6%. Neither figure is a complete picture, and together they say that profit was roughly flat once both items are set aside.
The refunds come from a court ruling. The 10-Q explains that “the U.S. Supreme Court ruled that many of the tariffs previously imposed under the International Emergency Economic Powers Act (IEEPA) were invalid”, and that PepsiCo filed recovery claims with U.S. Customs and Border Protection and “received substantially all of the refunds of such tariffs.” So import duties the company paid earlier came back as cash, and the money landed in this quarter’s profit.
PepsiCo counts the refunds inside its core results. The release lists the items it leaves out of core profit (commodity hedge marks, restructuring, acquisition items and pension settlements), and refunds are not among them. The company had pointed to them back in July, when its second-quarter remarks said that “refund claims for tariffs paid last year should help mitigate a good portion of the higher costs”. It does not call the refunds one-time, and it has not said whether any benefit remains for the fourth quarter.
The effect on earnings per share can only be estimated, since the tax on the refunds is not disclosed. At the quarter’s core tax rate of 21.2%, $178 million is about $140 million after tax, or about $0.10 on 1,367 million diluted shares (the rate and the share count are both in the release). Core EPS was $2.34, against $2.29 a year earlier, so on that estimate it would have been near $2.24 without the refunds.
PepsiCo now expects to earn less this year than it planned
The company lowered its profit outlook for 2026 while keeping its sales outlook intact. Core EPS is now expected to grow 2.5% to 3.5%, where the previous guidance, as the release prints it, was the low end of 5% to 7%. Organic revenue, which is sales growth with currency swings and acquisitions taken out, is expected to rise about 3%, the middle of the old range.
PepsiCo’s remarks say the lower outlook “reflects the margin pressures we expect in the North America business”, and that recovery there “is taking more time than we planned.” Two smaller changes soften the cut. The assumed tax rate for the year fell to about 21% from about 22%, which by itself lifts after-tax earnings by a little over 1%, and the expected currency benefit rose by half a point. Holding everything else constant, our estimate is that the outlook for the underlying business moved by closer to 4 points than the 2 points the headline range suggests.
The guidance also implies a figure for the last quarter of the year, which PepsiCo does not guide separately, and the arithmetic uses only the company’s numbers. Core EPS for fiscal 2025 was $8.14, per the fourth-quarter 2025 release, so growth of 2.5% to 3.5% means about $8.34 to $8.42 for this year. The 36 weeks to September 5 produced $6.15, so the guidance implies roughly $2.19 to $2.27 for the fourth quarter, against $2.26 a year earlier.
That is a change of direction. In July the company said it expected EPS growth “to be primarily weighted towards the fourth quarter”, and its December 2025 plan said “we expect PepsiCo Foods North America to deliver organic revenue growth and core operating margin expansion in fiscal 2026.” Through 36 weeks that business’s organic revenue is flat and its core margin is 22.2% against 24.1%. The payout plan did not change, at $7.9 billion of dividends and $1.0 billion of share buybacks for the year.
Other big food companies are still raising prices
Among the large packaged food and drink companies we checked, PepsiCo’s snack business is the only one where price pulled North American sales down in the latest quarter. The table sets PepsiCo’s two North America businesses beside four others, each taken from that company’s own results release. The measures are close cousins and not identical (some companies report volume together with product mix), and these are different three-month periods, since each row is that company’s latest reported quarter.
Two rows stand out. Coca-Cola reported both volume and price up in North America in its quarter ended July 3, 2026, while at PepsiCo’s own North America drinks business volume took 3 points off sales and price added 3. Campbell’s snack division reported volume and mix down 6% in the quarter ended August 2, 2026, and its release said the declines “were driven primarily by our salty portfolio” along with partner brands. PepsiCo says it gained volume share in salty snacks in its own quarter, which overlaps Campbell’s only in part. A table like this one describes results and cannot show who took sales from whom.
The headline numbers look better than the business underneath
PepsiCo’s reported profit rose much faster than its core profit, mostly because of charges that last year’s quarter carried and this one did not. Net revenue was $25,274 million, up 5.6%, and reported earnings per share rose 17% to $2.23, while core EPS rose 2%. Core EPS was above the $2.29 consensus compiled by FactSet, and revenue was above the $24.95 billion that the same firm compiled.
The table, from the release’s reconciliation, shows the gap between the two measures narrowing from $0.39 a share to $0.11, which accounts for $0.28 of the $0.33 rise in reported EPS. A plus sign is a cost the company adds back to reach core EPS and a minus sign is a gain it takes out (each line is rounded, so they do not sum exactly). Our guide to GAAP and non-GAAP earnings explains what companies usually exclude.
All of the growth came from outside North America. The four international businesses together earned $2,309 million of core operating profit against $1,998 million, a rise of about 16%, while the two North America businesses together earned $2,394 million against $2,545 million, about 6% less, and that is with the tariff refunds counted in.
PepsiCo shares closed at $123.73 on October 7, 2026, the day before the release, which in StockTitan’s daily price data was the lowest close of the 251 sessions from October 8, 2025 to October 7, 2026. At that close the stock stood at about 14.7 times the $8.41 of core EPS reported over the last four quarters, a division of ours that uses earnings including the refunds and that you can repeat with the P/E ratio calculator. The PepsiCo overview page carries the current quote, the PepsiCo financials page has the figures by quarter, and the filing is on StockTitan as PepsiCo’s Form 8-K of October 8, 2026.
More cost cuts are coming, with no number attached yet
PepsiCo promised more cost cuts and gave no figure for them. Chief executive Ramon Laguarta said in the release that “Additional structural cost reduction actions are being identified and will be implemented in the coming months to help fund investments that aim to accelerate organic revenue growth and mitigate the impacts of rising input cost inflation.” The remarks give as examples “reductions in corporate costs and other initiatives not directly tied to growth”.
What the 10-Q does put numbers on is the existing productivity plan, which began in 2019 and runs to 2030, and those numbers are not a measure of the new cuts. Severance and other employee costs under that plan were $148 million in the quarter, against $46 million a year earlier. The filing adds that “For the remainder of 2026, we expect to incur pre-tax charges of approximately $500 million and cash expenditures of approximately $250 million”. These charges are left out of core EPS, so all else equal they would widen the gap between reported and core earnings in the fourth quarter.
Signals that would show the story turning
The clearest signal sits in the snack aisle. Continued volume growth with flat net pricing would suggest demand is holding without further net price reductions, and a recovery in the snack business’s core profit would strengthen that reading. Volume fading while pricing stays negative would suggest the opposite.
The refunds are the other thing to watch. Substantially all of them have been received, according to the 10-Q, and whether any benefit is still to come in the fourth quarter is undisclosed. In the remarks, the finance chief’s commentary says North America’s core margin is expected “to remain under pressure in the fourth quarter”.
Several company statements are still to come. PepsiCo has not put a figure on the new cost cuts, it said in December 2025 that it intended to update investors in late 2026 on its review of the North America supply chain and go-to-market systems, and it has yet to give an outlook for fiscal 2027. For how to read an outlook against analyst estimates, see our explainer on guidance and consensus estimates.
Frequently asked questions
Are PepsiCo snacks getting cheaper?
On PepsiCo’s own measure, yes in North America. Effective net pricing in its North America foods business, which counts discounts, promotions and pack mix, has been negative in all three quarters of 2026, and it took 1 point off sales growth in the third quarter. The company calls these “affordability investments”. The figure is an average across the business and does not describe any single product or store.
Did PepsiCo beat earnings estimates in Q3 2026?
Yes on the headline measures. Core EPS was $2.34 against the $2.29 consensus compiled by FactSet, and net revenue was $25.27 billion against $24.95 billion. The quarter’s core operating profit included $178 million of tariff refunds, which the company disclosed in its prepared remarks.
Why did PepsiCo cut its 2026 earnings guidance?
PepsiCo said the lower outlook reflects margin pressure in its North America business, where recovery is “taking more time than we planned.” Core EPS is now expected to grow 2.5% to 3.5% in fiscal 2026, down from the low end of 5% to 7%. Organic revenue guidance was set at about 3%, the middle of the earlier 2% to 4% range.
What are PepsiCo’s tariff refunds?
They are repayments of import duties that PepsiCo had paid under tariffs, many of which the U.S. Supreme Court later ruled invalid. The company’s Form 10-Q says it filed claims with U.S. Customs and Border Protection and has received substantially all of the refunds. They added $178 million to core operating profit in the third quarter of 2026.
Did PepsiCo change its dividend or buyback plans?
No. The October 8, 2026 guidance keeps expected cash returns to shareholders at $8.9 billion for fiscal 2026, made up of $7.9 billion of dividends and $1.0 billion of share repurchases. The annualized dividend is $5.92 a share, following a 4% increase announced in February 2026.
Where can I follow PepsiCo filings on StockTitan?
The PepsiCo overview page lists the company’s news, SEC filings and price data as they arrive, and each 8-K, 10-Q and 10-K has its own page with a summary. The financials page shows revenue, profit and per-share figures by quarter. Our editorial policy explains how articles like this one are sourced and checked.
- StockTitan: PepsiCo overview and price data
- StockTitan: PepsiCo Form 8-K, October 8, 2026
- StockTitan: PepsiCo financials
- PepsiCo third-quarter 2026 results release (Exhibit 99.1 to Form 8-K)
- PepsiCo Form 10-Q for the 12 and 36 weeks ended September 5, 2026
- PepsiCo third-quarter 2026 prepared management remarks
- PepsiCo second-quarter 2026 prepared management remarks
- PepsiCo second-quarter 2026 results release
- PepsiCo first-quarter 2026 results release
- PepsiCo fourth-quarter and full-year 2025 results release
- PepsiCo third-quarter 2025 results release
- PepsiCo second-quarter 2025 results release
- PepsiCo first-quarter 2025 results release, with recast 2024 quarters
- PepsiCo release of December 8, 2025, with the preliminary 2026 outlook
- The Coca-Cola Company second-quarter 2026 results release
- Mondelez International second-quarter 2026 results release
- The Campbell’s Company fourth-quarter fiscal 2026 results release
- The Kraft Heinz Company second-quarter 2026 results release
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