UPDATE 3-Gatorade, snack stores boost Pepsi profit, shares up

* Q2 EPS $1.09 ex-items vs Wall St $1.08 view

* Affirms FY10 forecast, including currency impact

* Q2 rev up $14.80 bln vs Wall St $14.41 bln view

* Pepsi shares up 2.4 percent; Coke gains 1 percent (Adds company comments)

By Brad Dorfman

CHICAGO, July 20 (Reuters) - PepsiCo Inc's (PEP.N) quarterly profit and revenue topped Wall Street estimates, helped by growth in its Gatorade sports drink business and improved convenience store sales.

The maker of Pepsi cola, Tropicana juice, Frito-Lay snacks and Quaker Oats cereals, also cited strength in international markets and the recent acquisition of its North American bottlers, sending its shares up 2.4 percent. Rival Coca-Cola Co (KO.N), which reports results on Wednesday, gained 1 percent.

PepsiCo introduced new Gatorade drinks aimed at athletes, just one example of how the company has been spending aggressively on new products.

"They've done a tremendous job in innovation and really giving consumers what they want," said Tim Hoyle, vice president of research at Haverford Investments, which holds shares of both Pepsi and Coke.

Pepsi also stood by its full-year earnings forecast, assuaging some fears that it would take a more negative view on the impact of a stronger dollar on overseas sales.

Still, PepsiCo executives cautioned that unemployment in the United States remains high and that the environment in Europe remains challenging.

"The economic environment is not showing consistent improvement across all measures," PepsiCo Chairman and CEO Indra Nooyi said during a conference call with analysts.

PepsiCo earned $1.60 billion, or 98 cents per share, in the second quarter, its first full quarter owning its largest bottlers. The quarter was also weighed down by higher interest expense. A year earlier, the company posted a profit of $1.66 billion, or $1.06 a share.

Excluding one-time items, earnings per share were $1.09, compared with the analysts' average view of $1.08, according to Thomson Reuters I/B/E/S.

BOTTLER DEAL A BOOST

Revenue rose 40 percent to $14.80 billion, helped by the acquisition of the bottlers. Analysts on average were expecting $14.41 billion.

Strength in emerging markets helped offset weak demand for carbonated soft drinks in North America.

"That's really where the future growth is going to come, in Asia, the Middle East and Africa," Haverford's Hoyle said.

Volume in Asia, Middle East and Africa rose 16 percent for snacks and 8 percent for beverages, the company said.

PepsiCo closed the acquisition of the bottlers in late February, a move meant to cut costs and give it more control over the distribution of its drinks in North America, where sales have been sluggish for some time.

The $7.8-billion purchase gave PepsiCo a head start over Coca-Cola, which expects to close a similar deal in the fourth quarter.

The company expects cost savings and benefits of $125 million to $150 million from the acquisition in 2010 and $400 million annually by 2012.

PepsiCo stood by its forecast calling for earnings per share to rise 11 percent to 13 percent this year, excluding currency fluctuations and other one-time items. It said current exchange rates would cut 1 percentage point from the growth rate, in line with prior expectations.

"The fact that Pepsi did not have to reduce expectations for currency is a positive for Coke," Hoyle said.

In North America, sales by volume fell 3 percent in the Frito-Lay snacks business and declined 1 percent in the beverage business, excluding a gain from a deal with Dr Pepper Snapple Group Inc (DPS.N).

In the Latin American Foods unit, volume rose 2 percent.

PepsiCo said it bought back 39 million shares of its stock for $2.6 billion in the second quarter and plans to spend $4.4 billion on stock repurchases for the year. (Reporting by Brad Dorfman and Martinne Geller; Editing by Michele Gershberg and Derek Caney)