Diageo Plc cut its guidance for the second time this fiscal year as the British distiller struggles to revive demand in the US and China, in an early challenge for new Chief Executive Officer Dave Lewis.
The maker of Guinness and Johnnie Walker whisky now expects full-year organic net sales to drop 2-3%, according to a statement on Wednesday. It had previously expected full-year sales to be flat to slightly down. Diageo will also reduce its dividend, and Lewis said he is working on an updated strategy for the group that it will reveal during the third quarter.
In Ireland, the drinks giant reported net sales growth of 1.3%, driven by the continued growth of Guinness, supported by pricing, market share gains and the start of a partnership with Live Nation. There was also a strong contribution from Guinness 0.0.
Shares of Diageo fell 5.8% on Tradegate compared with Tuesday’s close in London. They were down almost 14% in the past 12 months.
Lewis, known for his turnaround of UK supermarket Tesco Plc, took over Diageo with the company grappling with faltering demand for alcoholic beverages. He replaced Debra Crew, who stepped down in July last year after a challenging two years that included a profit warning, a prolonged share slump and escalating global trade tensions.
Diageo also reported organic net sales fell 2.8% in the first half, more than analysts expected. The slump in China worsened, with sales in the Greater China region down 42%. Sales of spirits dropped 9.3% in the US.
“Pressure on consumer wallets and an increasingly competitive environment, especially in tequila, is having a marked impact on US spirits performance,” Chief Financial Officer Nik Jhangiani said on a webcast.
Bloomberg
