Coca-Cola (NYSE:KO) is starting to feel the pinch from the COVID-19 pandemic. In an earnings report released Tuesday, the beverage giant reported solid first-quarter sales and earnings results that mostly met management's expectations. But trends significantly worsened from there as stay-at-home mandates removed entertainment outings like concerts and sporting events from its sales base in late March and April.

CEO James Quincey and his team stressed that short-term trends will shift wildly depending on the path of the virus and the timing of the economic rebound, but the company warned that the impact on the current quarter will be significant with volume down 25% so far in April.

Let's take a closer look at the latest updates.

Two glasses of soda with ice on a table.

Image source: Getty Images.

Feeling the pinch

The fiscal first quarter ended on March 27 and included peak lockdown measures in China and the beginning of such efforts in Europe and the U.S. Sales in that period were generally strong but showed signs of stress. Organic volume outside of China was up 3% through February, executives said, meeting the company's full-year targets.

Yet the slowdown was unmistakable with reduced selling opportunities pushing organic sales growth down to flat year over year, a stark contrast to last quarter's record 7% growth. Executives noted a demand spike from its retailing partners such as supermarkets and warehouse retailers, but that boost quickly subsided after consumers had fully stocked their pantries. The lift was offset by lower sales at restaurants and other away-from-home channels, including sporting events, concerts, and vending machines. Those channels represent about half of Coca-Cola's revenue.

Shifting priorities

The beverage giant is working hard to shift its manufacturing, marketing, and selling postures to adjust to the new economic reality. These changes include "shifting toward package sizes that are fit-for-purpose for online sales, and redeploying consumer and trade promotions toward digital."

Management is shifting its manufacturing toward that growing online channel and adding resources to support its retailing network. "The company is moving with speed to continue to best serve its customers and consumers," executives said.

In the meantime, its finances are solid. Coca-Cola has shored up its balance sheet in recent weeks and now has $15.3 billion of cash, equivalents, and short-term investments on hand, nearly double the balance from just three months ago. That savings pile should help it navigate through even a prolonged slowdown. "We've been through challenging times before as a company," Quincey said, "and we believe we're well positioned to manage through" the current crisis.

Looking ahead

Management didn't offer a detailed projection for sales or profit trends and instead reiterated their late March comments that volatility is too high to make any meaningful forecasts. Still, the consumer-staples giant hinted at a massive drag on its business in recent weeks.

Sales volumes fell 25% in the first few weeks of April as most away-from-home drinking occasions evaporated. How the company's full quarter (which runs through June) looks in comparison to that eye-popping figure will depend on the duration of the shelter-in-place mandates that are still gripping most of its biggest markets, along with the speed of the economic recovery that should follow once the COVID-19 threat has subsided.