Remy Cointreau warned investors to lower their annual sales expectations for the third time in four months on Wednesday, flagging a “marked decline” in China and ongoing problems in the US, where tariff threats loom.
The French group’s shares fell 3.8 per cent in early trade despite reporting a smaller-than-expected decline in third-quarter sales thanks to a significantly better than-projected performance in cognac, its core product.
The maker of Remy Martin cognac and Cointreau liquor stuck to its full-year guidance for a sales decline of between 15 per cent and 18 per cent but warned that it would be “close to” 18 pre cent, against analyst expectations of a 16.9 per cent drop.
“Trends in the fourth quarter will be decisive,” it said in a statement.
Remy’s latest guidance for annual sales outweighed the positive third-quarter news, said Jefferies analyst Edward Mundy.
In the midst of steep and persistent sales declines, Remy had already cut full-year guidance in October and warned in November of a deeper decline than investors had been expecting.
In the US, high interest rates and inflation have led retailers and wholesalers to cut more expensive stock, such as Remy’s cognac, from inventories while competitors have cut prices sharply to forge ahead.
In China, growth has slowed in the face of a sluggish economy and low consumer confidence.
Remy warned of a “marked decline” in China and a further “strong drop” in its Americas division, consisting mostly of its US business.
The US and Chinese markets drive the majority of cognac sales, which account for about 70 per cent of Remy’s revenue.
Despite this, Remy’s cognac sales fell far less than expected, down 22 per cent on an organic basis against the 27 per cent drop expected by analysts.
In addition, the company now faces tariffs in China and the threat of US levies, which could dent its businesses further.
- Reporting by Dominique Vidalon; Editing by Varun H K and David Goodman, of Reuters.
