Remy Cointreau SA fell to a three-year low after the French distiller cut its annual sales guidance, citing weaker-than-expected US demand for its high-end spirits.
The French cognac maker said it expects organic sales to fall by 15% to 20% this year. Shares of the company, which had previously forecast flat sales, plunged as much as 12% Friday morning in Paris.
Remy and other spirits producers are facing a slowdown in demand for their premium drinks, particularly in the US, after sales boomed during the pandemic.
The company warned that a rebound in US sales previously expected in the second half of this fiscal year won’t happen until next year.
“Market conditions appear worse than initially expected, with Remy Martin’s firmer pricing policy contrasting against the intense promotional activity from competitor brands and putting additional short-term pressure on volumes,” said Edward Mundy, an analyst at Jefferies. “We expect this to be exacerbated by a degree of wholesaler inventory reduction.”
Tough Times
Remy’s disappointing results add to tough times for the premium drinks sector. Italian rival Campari’s shares skidded as much as 13% on Thursday after the Aperol maker reported third-quarter sales and profits that were below expectations.
Luxury group LVMH’s wine and spirits division recently suffered a much worse-than-expected 14% third-quarter sales drop.
In a statement, Remy said the US market has deteriorated because of sharp competition and as higher interest rates have reduced access to financing at distributors.
Remy’s second-quarter revenue and organic sales growth missed analyst consensus forecasts.
The Paris-based company said it will maintain strict cost controls and keep raising prices to protect margins. It also plans to reduce marketing spending, particularly for cognac.
(Updates with shares)
