By Dominique Vidalon
PARIS (Reuters) -French spirits maker Remy Cointreau pushed back its recovery on Thursday as it cut sales and profit goals for the year, citing deteriorating market conditions in China and a weaker-than-expected rebound in U.S. sales.
Its shares were down nearly 11% as the market opened.
Remy Martin cognac and Cointreau liqueur reported a worse-than-expected 11% decline in second-quarter sales, reflecting tougher market conditions in China and a later-than-usual Mid-Autumn Festival.
“The magnitude of today’s warning is substantial and implies the company is suffering from the continued deterioration in global cognac demand as well as a likely margin reset,” JP Morgan analysts said.
SALES SLUMP IN CHINA, US AS TARIFFS HIT COGNAC
Sales have slumped in Remy Cointreau’s critical U.S. and Chinese markets in recent years, forcing multiple guidance downgrades and the scrapping of medium-term sales targets. The company, however, had said in June that the worst was over.
Incoming CEO and luxury goods veteran Franck Marilly has yet to detail his own strategic roadmap.
The entire spirits sector has suffered as a sales boom seen after the COVID-19 pandemic went into reverse, more recently exacerbated by tariffs on cognac imports in China and on EU goods entering the United States.
But Remy, which makes 70% of its sales from cognac, mostly in the U.S. and China, has suffered more than its peers.
Sales reached 268.8 million euros ($313.5 million), marking a like-for-like decline of 11% in the July-to-September quarter, worse than average analysts’ expectations of a 9% decline in a company-compiled consensus.
The cognac division’s sales fell 13.5% in the quarter, reflecting mostly a sharp fall in China.
In contrast, the Americas region posted a second consecutive quarter of strong growth, supported by a very favourable basis of comparisons and continued sequential improvements in depletions, the group said.
Remy said it now expects organic sales growth for the full-year 2025/2026 to range between stable and low single digits, compared to its previous forecast for mid-single-digit percentage organic growth.
The group also expects an organic decline in annual current operating profit of between low double digits and mid-teens, versus a mid-single-digit decline previously forecast.
($1 = 0.8575 euros)
(Reporting by Dominique Vidalon;Editing by Sudip Kar-Gupta and Joe Bavier)
