By Shashwat Awasthi and Emma Rumney
(Reuters) -Diageo cut its sales and profit forecasts on Thursday, tipping its shares to a decade-low, as the world’s top spirits maker left investors hanging on who its permanent CEO will be.
Stubbornly low sales in the U.S. and China, two crucial spirits markets where consumer confidence is low or their spending stretched, are punishing the maker of Johnnie Walker whisky and Smirnoff vodka along with its rivals.
“There’s much more for us to do, and we need to go faster,” said interim CEO Nik Jhangiani after Diageo’s first quarter trading update, adding the performance was unsatisfactory.
Diageo is attempting to cut costs and sell assets as the drinks industry faces cooling post-pandemic demand, tariff-related uncertainty and shifting consumer habits.
Shares in Diageo slipped 5.3% to levels last seen in 2015, compounding an almost 30% fall so far this year.
SILENCE ON PERMANENT CEO LEAVES DOUBTS
Jhangiani, who stepped in after the abrupt exit of former Diageo CEO Debra Crew in July, previously said he expected a decision on a permanent replacement by the end of October.
But the company did not provide an update on Thursday.
Cranley Macfarlane, deputy chief investment officer at Diageo investor Church House Investments, said this raised questions over why Jhangiani has not been confirmed in the CEO role on a permanent basis, as some had expected.
Others said it also raised doubts over strategy.
“There is a plan in place which is going in the right direction, but whether a new CEO has a different view and a different strategy, no one will know until a permanent CEO is in place,” said Richard Scrope, manager of the VT Tyndall Global Select Fund, which also holds Diageo stock.
TROUBLES IN CHINA AND U.S.
Diageo said it now expects 2026 sales to be flat or slightly lower with only low to mid single-digit operating profit growth.
It had earlier forecast annual sales performance similar to last year, when sales grew 1.7%, along with mid single-digit operating profit growth in 2026.
The decision to revise the outlook came despite a better-than-expected, albeit flat, first-quarter sales performance.
Diageo flagged a double-digit decline in sales in China, driven by a drop in consumption of national spirit baijiu.
Meanwhile, in the United States, its sales fell 4.1% with a steep drop in tequilas such as Don Julio, which has been a critical growth engine for Diageo.
(Reporting by Shashwat Awasthi in Bengaluru and Emma Rumney in London; Editing by Louise Heavens, Joe Bavier and Alexander Smith)
