Coca-Cola (KO) beat on earnings and revenue in the first quarter. But, the company said today, April 21, monthly volumes have slumped in April by about 25% globally.
The most likely cause of the pattern: Consumers stocked up on Coke products as the coronavirus pandemic worsened and then sales fell as many of the physical venues that sell coke–movie theaters, sport stadiums, and convenience stores–closed under shelter in place orders.
The company reported earnings per share of 64 cents (on a GAAP basis), beating Wall Street projections by 20 cents a share. Revenue of $8.6 billion beat estimates by $280 million but was down 1.0% year over year.
To make up for the drop in overall visits to physical venues that sell Coke, the comply is adding promotions and focusing on e-commerce deliveries of household goods.
But Coke doesn’t really have a robust digital strategy in place and it will be hard for the company quickly to make up in digital sales for the loss of physical sales. One of Coca-Cola’s strengths as a consumer goods company is that its products are/were everywhere in the physical world.
Coke shares closed down 2.47% today as the overall market fell with the Standard & Poor’s losing 3.07%. At $45.38 Coca-Cola is well above the March 23 low of $37.56 but has slipped from the April 9 high of $49.
At today’s close the shares are just at the 20-day moving average of $45.39 so any move from here could be significant. Except that any upside gains will have to break through chart resistance at the 50-day moving average ($50.38) and at the 200-day moving average ($53.30).
The shares pay a dividend of 3.52%. Â They are down 15.19% for 2020 as of the close on April 20.
