Pepsi Blames Unions And labour Day Coming On The 'Wrong' Day For Sales Decline

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PepsiCo had a bizarre explanation for the decline in its soda and beverage sales in North America in its 10-Q filing with the SEC: labour Day came on the wrong day this year.It’s true that sales can be affected when the seasons and the calendar don’t fall exactly right for some companies. Summer, for instance, is a key selling time for Pepsi, and labour Day marks its end. Here’s what PepsiCo said in its filing:

Volume performance in North America was negatively impacted by approximately 1 percentage point due to a calendar shift related to the labour Day holiday.

Pepsi’s sales were the usual story in Q3: Not great.

“Organic” (like-for-like) revenue grew 5%, but the sale of some business units led to an overall sales decline of 5% to $16.6 billion.

PEP’s food and snacks business is relatively healthy, but its Pepsi soda and Gatorade sales in North America have been in a long, slow decline.

In Q3, they saw a volume decline of 3%, a net sales decline of 7% and an operating profit collapse of 16%. A large part of that was due to the sale of a Mexican drinks business. But there was also a volume decline of 2% for soda sales — PepsiCo’s flagship brand — and a 7% decline in non-soda drinks. The latter was led by “a high-single-digit decline” in Gatorade, which until recently had been a turnaround success story at the company.

So why is this all the fault of labour Day?

A PepsiCo spokesperson tell us that it’s due to the unions who control its shipping operations and a quirk in the company’s fiscal calendar. Last year, PEP’s Q3 ran from June 12 to Sept. 3, so labour Day — which was Sept. 5 that year — fell outside the quarter. This year, PEP’s Q3 ran from June 17 through Sept. 8, and the Sept. 3 labour day fell within the quarter.

Pepsi’s “unions don’t work on labour Day, so we don’t ship on that day,” a spokesperson tells us. This “lost” labour Day then wipes 1% off North American sales.

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