Latest news with #pricingstrategy
Globe and Mail
06-08-2025
- Business
- Globe and Mail
Pricing Power vs. Volume Pressure: What's Driving PepsiCo Now?
PepsiCo, Inc.'s PEP second-quarter 2025 performance reveals a company at the crossroads of leveraging pricing power while wrestling with volume pressures, particularly in North America. The beverage and snack giant beat expectations with earnings per share (EPS) of $2.12 and revenues of $22.73 billion in the quarter under discussion, while volume softness across several segments remained a concern. To counter declining volumes, PepsiCo has leaned heavily into strategic pricing and value-creation efforts. The company is focusing on granular investments in affordability entry points, everyday low pricing and value packs to retain consumers amid a moderating demand environment. This pricing discipline has enabled top-line growth despite softer underlying consumption trends. A key driver of resilience is PepsiCo's multi-layered productivity strategy, leveraging AI, ERP upgrades and North America integration to drive cost savings. The company expects a 70% increase in productivity in the second half of 2025, largely from Frito-Lay. Plant closures and fixed-cost reductions have supported margins and freed up funds for investment in innovation and value offerings. However, despite stable margins, sluggish volume growth raises concerns about long-term brand strength and category leadership. PepsiCo remains confident that its pricing-led strategy will not only sustain profitability but also position it for a rebound in volumes. Relaunching core brands such as Lay's and Tostitos with cleaner labels, expanding the permissible snacking portfolio and increasing focus on away-from-home consumption are expected to reignite consumer engagement. With consistent international growth and improving U.S. market competitiveness, the company is betting that its balanced approach, pricing precision, operational discipline and brand innovation will help it return to its long-term growth in the coming quarters. PEP's Competitors: KO & KDP's Smart Moves In the fiercely competitive beverage industry, PepsiCo faces strong challenges from two major players like The Coca-Cola Company KO and Keurig Dr Pepper KDP, each leveraging distinct strengths to capture market share and drive growth. Coca-Cola continues to focus on brand strength and global reach to maintain its leadership in the non-alcoholic beverage sector. Despite facing similar volume pressures, Coca-Cola's pricing power and brand loyalty have allowed it to deliver strong margin performance. Its global dominance in sparkling beverages, particularly with Coca-Cola Zero Sugar, and its diversified presence across more than 200 markets reinforce its position as a formidable competitor to PepsiCo. Keurig Dr Pepper operates with a unique edge through its hybrid portfolio of hot and cold beverages, anchored by its leadership in single-serve coffee systems and popular soft drink brands like Dr Pepper and Canada Dry. Keurig Dr Pepper benefits from a strong foothold in at-home consumption trends, particularly with its Keurig brewers. Its recent moves toward premiumization, strategic partnerships and focus on functional beverages demonstrate a nimble approach to consumer preferences. PEP's Price Performance, Valuation & Estimates Shares of PepsiCo have lost around 8.3% year to date against the industry 's growth of 3.7%. Image Source: Zacks Investment Research From a valuation standpoint, PEP trades at a forward price-to-earnings ratio of 16.88X, slightly below the industry's average of 17.39X. Image Source: Zacks Investment Research The Zacks Consensus Estimate for PEP's 2025 earnings implies a year-over-year decline of 1.8%, whereas its 2026 earnings estimate indicates year-over-year growth of 5.2%. The company's EPS estimates for 2025 and 2026 have moved northward in the past 30 days. Image Source: Zacks Investment Research PEP stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Zacks' Research Chief Picks Stock Most Likely to "At Least Double" Our experts have revealed their Top 5 recommendations with money-doubling potential – and Director of Research Sheraz Mian believes one is superior to the others. Of course, all our picks aren't winners but this one could far surpass earlier recommendations like Hims & Hers Health, which shot up +209%. See Our Top Stock to Double (Plus 4 Runners Up) >> Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. CocaCola Company (The) (KO): Free Stock Analysis Report PepsiCo, Inc. (PEP): Free Stock Analysis Report Keurig Dr Pepper, Inc (KDP): Free Stock Analysis Report
Bloomberg
17-07-2025
- Business
- Bloomberg
Target to End Policy That Matches Prices of Competitors
Target Corp. is ending a long-standing program that matches prices of items with those of competitors, as the big-box retailer looks to simplify its pricing strategy. The retailer said it will continue to match prices within its own ecosystem — such as if there's a discrepancy between an item's cost online versus in stores, but will no longer match prices at competing retailers.
Yahoo
12-07-2025
- Business
- Yahoo
Behind Altria's Profit Resilience: The Power of Pricing Strategy
Altria Group, Inc. MO has demonstrated remarkable resilience in a challenging operating environment, and a major driver of this strength is its robust pricing strategy. Despite ongoing volume pressures in the cigarette category and the impact of strict regulations, the company has effectively leveraged its pricing power to support revenue and profit the first quarter of 2025, Altria's pricing actions played a key role in boosting revenues across both its Smokeable Products and Oral Tobacco segments. This pricing-led growth strategy continues to offset volume declines, underscoring the inelastic nature of cigarette demand. Consumers, particularly in tobacco, often remain loyal despite price hikes due to the addictive nature of the product, allowing Altria to sustain its company's ability to strategically raise prices without significantly losing consumers has been critical in maintaining profitability. This strength is further reflected in Altria's 2025 earnings outlook. Management expects adjusted earnings per share (EPS) to range between $5.30 and $5.45, signaling year-over-year growth of 2% to 5% from the 2024 base of $5.19. As Altria continues to focus on premium pricing and cost discipline, it remains well-positioned to navigate industry challenges while delivering shareholder value. Philip Morris International Inc. PM continues to demonstrate that pricing power is a central engine behind its robust profitability. In the first quarter of 2025, PM reported organic net revenue growth of 10.2% and organic operating income growth of 16%, with gross margin expansion of 340 basis points (bps) on an organic basis. Notably, pricing contributed 6 points to Philip Morris' net revenue growth, driven by an 8% increase in combustible pricing and around 3% in smoke-free products excluding Point Brands, Inc. TPB emphasizes brand strength and market positioning over aggressive pricing. Stoker's portfolio of Turning Point Brands showed volume resilience due to consumer trade-down trends, while its modern oral business relies more on strategic brand building than aggressive pricing. Turning Point Brands continues to invest heavily in distribution and marketing, with margin performance influenced by mix shifts and input cost pressures, including tariffs. Shares of Altria have gained 24.4% in the past year compared with the industry's growth of 55.6%. Image Source: Zacks Investment Research From a valuation standpoint, MO trades at a forward price-to-earnings ratio of 10.72X, below the industry's average of 15.09X. Image Source: Zacks Investment Research The Zacks Consensus Estimate for MO's 2025 earnings implies year-over-year growth of 4.7%, whereas its 2026 earnings estimate suggests a year-over-year uptick of 3.1%. The estimates for 2025 and 2026 have remained unchanged in the past 30 days. Image Source: Zacks Investment Research MO stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Altria Group, Inc. (MO) : Free Stock Analysis Report Philip Morris International Inc. (PM) : Free Stock Analysis Report Turning Point Brands, Inc. (TPB) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Asharq Al-Awsat
26-06-2025
- Business
- Asharq Al-Awsat
H&M seeks to Lure US Shoppers as Fast-fashion Rivals Hike Prices Due to Tariffs
H&M is trying to win shoppers from rivals in the United States by holding prices steady while Zara and Shein raise theirs, as US tariffs disrupt the fast-fashion industry that relies on imports of low-cost clothes from China, Vietnam, and other Asian countries. H&M CEO Daniel Erver said on Thursday constantly changing tariffs had created turbulence, with the world's second-largest listed fashion retailer planning for multiple scenarios. In an interview, he told Reuters that the challenge in the coming months is "to understand the consumer sentiment, which we see has dropped in the US due to all the turbulence... with the fact that some will be forced to raise prices more, and what (that creates) as an opportunity". "Different competitors are acting in different ways, some more aggressively, some more cautiously," he added. H&M has around 500 stores across the US, its second-largest market after Germany in terms of sales, accounting for 13% in 2024. As US tariffs add to costs for retailers, relative price positioning is front of mind for executives, and the timing of price increases is key, with companies watching the competition closely to see who will blink first. For H&M, which is trying to improve its profitability, sticking to current prices for longer carries risks as rising costs eat into margins. But it also provides an opportunity to take market share from rivals. "Maybe they are going to raise prices in the US... but just to a lesser extent as compared to competitors," Pareto Securities analyst Alexander Siljestrom said. H&M can also mitigate the tariff impact by shifting production of US-bound clothes from China, which faces the highest tariff rate, to Bangladesh and elsewhere, he said. Across categories including dresses, jeans, and shirts, the average US price at H&M's bigger competitor Zara was up by 28% this month from a year ago, according to data from price tracking firm EDITED, while prices at H&M in the US were on average down 3% year-on-year. Zara prices were up across the board in June compared to January this year, EDITED found, while H&M has kept prices more or less stable, even though its chief financial officer Adam Karlsson said in March that price hikes were likely to offset tariffs. Shein, which sends clothes direct to US shoppers from factories in China, has also had to raise prices and suffered weaker customer growth since Trump ended the "de minimis" duty-free treatment of low-value parcels. SOURCING FROM FEWER, CLOSER SUPPLIERS As it aims to improve its supply chain and get new styles to stores faster, H&M has spent the last 18 months consolidating its supplier base, Erver said, aiming to order more from a smaller number of big suppliers who also operate factories in multiple countries. "We look at each individual order to decide what's the best sourcing market depending on the craftsmanship, the skills, the pricing situation, but also now more than ever the geopolitical situation with trade barriers," he told Reuters. "That has led us in certain cases to take the decision to move things to different markets." H&M also aims to be below full capacity with all of its suppliers, so it can easily increase production if needed when an item sells well, Erver said. As part of its "nearshoring" strategy of sourcing products from suppliers closer to main consumer hubs, H&M is looking to increase its supplier base in markets like Türkiye, Egypt, Jordan, and Morocco for Europe, Erver said. H&M will also add suppliers in Brazil, where it is opening its first stores in the second half, he added.
Globe and Mail
23-06-2025
- Business
- Globe and Mail
Can Procter & Gamble's Pricing Power Keep Earnings Buoyant in 2025?
The Procter & Gamble Company 's PG pricing strength serves as a vital pillar of its overall business strategy, which looks to enrich consumer value, boost profits and retain a competitive edge. PG's value-based pricing approach across categories like laundry detergents enables it to reduce dependence on promotional discounts, alongside maintaining competitive pricing and sustaining market share. PG's pricing strategy extends beyond price hikes and controls, complemented by ongoing product innovations and launches that drive value and validate premium positioning. Procter & Gamble has innovations across all price tiers within the Fabric Care Tight, Oxy Boost and Power Pods. The company is focused on optimizing skincare pricing in China, complemented by super-premium innovations under the SK-II portfolio, which is aimed at expanding its market share in the region. In the recent past, the company has successfully navigated elevated commodity costs, supply-chain disruptions, inflationary headwinds and currency volatility by its strategic pricing and productivity measures, reaffirming its commitment to steady margin growth. PG's pricing power has also offered resilience in tough times, like the pandemic. The company's goal is to regain pre-pandemic productivity levels, with a target of accomplishing gross savings in the cost of goods sold of up to $1.5 billion, before tax. In third-quarter fiscal 2025, pricing rose 1% and aided organic sales and gross margin. Our model anticipates pricing gains of 0.6% each for the fourth quarter and fiscal 2025. This is likely to continue bolstering organic sales, which we anticipate growing 1.9% and 2%, respectively, for the fourth quarter and fiscal 2025. As Procter & Gamble has an extensive portfolio with diverse price points and pack sizes, it continues to evaluate consumer pricing in effective categories and markets to ensure competitiveness. The company targets pricing with innovation and is focused on implementing pricing actions, which are likely to drive sustained growth and profitability. PG's Competition in Pricing Dominance Colgate-Palmolive Company CL and The Clorox Company CLX are the major companies competing with Procter & Gamble in pricing strength. Colgate also leverages its pricing power to aid growth and offset external cost pressures. The company is benefiting from key pricing actions, coupled with its funding-the-growth program and other productivity moves, aimed at driving efficiency and expanding margins. It has revamped its innovation model, leveraged its global scale across price tiers, invested in marketing and reinforced operational capabilities, all to drive brand health and higher household penetration. In first-quarter 2025, Colgate's organic sales were driven by a 1.5% improvement in pricing. We expect the company to benefit from pricing of 2.5% in 2025. Colgate's competitive pricing moves across its premium oral and personal care products will continue to bolster brand strength and retain market share. Clorox also places strong emphasis on pricing. The company's strategic pricing and cost-saving measures have been boosting gross margin expansion in recent periods. Despite the sales decline in third-quarter fiscal 2025, the gross margin expanded 240 basis points year over year, marking the company's 10th consecutive quarter of margin expansion. Clorox's holistic margin-management efforts, constant product innovations and IGNITE strategy progress well. Clorox's multi-faceted pricing policy includes premium pricing for its core brands, with a focus on premiumization and value for consumers. Our model anticipates price/mix/other to grow 0.2% in fiscal 2025. PG's Price Performance, Valuation and Estimates Procter & Gamble's shares have lost around 3.8% year to date compared with the industry 's 1.8% dip. From a valuation standpoint, PG trades at a forward price-to-earnings ratio of 22.67X, compared with the industry's average of 20.19X. The Zacks Consensus Estimate for PG's fiscal 2025 and 2026 EPS indicates year-over-year growth of 2.9% and 3.6%, respectively. The company's EPS estimate for fiscal 2025 has been stable and that for fiscal 2026 has moved northward in the past 30 days. Procter & Gamble currently carries a Zacks Rank #4 (Sell). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Zacks' Research Chief Names "Stock Most Likely to Double" Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest. This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%. Free: See Our Top Stock And 4 Runners Up Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Procter & Gamble Company (The) (PG): Free Stock Analysis Report Colgate-Palmolive Company (CL): Free Stock Analysis Report The Clorox Company (CLX): Free Stock Analysis Report
