Diageo Lowers Outlook On Dismal Drinking Demand As Shares Hit Decade Low
British spirits giant Diageo Plc, one of the world's largest drink makers, tumbled to a 10-year low on Thursday after lowered guidance overshadowed better-than-expected first-quarter sales. Wall Street analysts noted mounting frustration over the lack of detail regarding the company's search for a new chief executive.
The maker of Don Julio, Johnnie Walker, Casamigos, Smirnoff, and many other popular bar beverages now expect organic net sales to be flat to slightly lower, compared to prior guidance for growth. This dismal outlook overshadowed stronger-than-expected first-quarter sales.
Diageo shares in London fell 6% to a 10-year low, down 58% since peaking around 4,000 pounds in 4Q21.
Interim CEO Nik Jhangiani acknowledged a dismal outlook but reaffirmed that Diageo's $625 million cost-savings plan remains on track. Also weighing on sentiment is the lack of color over CEO succession after Debra Crew's sudden July exit.
"We are not satisfied with our current performance and are focused on what we can manage and control," Jhangiani said in the statement.
Wall Street analyst reactions
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Jefferies (Buy): Warned that the lack of management succession news could weigh on shares; said cash guidance is unchanged, but EBIT and sales were revised down, with Q1 ahead of expectations.
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RBC (Sector Perform): Highlighted that Q1 results beat expectations but full-year guidance was reduced due to weaker North American and Chinese demand; also noted no CEO update.
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Citi (Buy): Acknowledged Q1 beat but flagged that FY26 guidance downgrades and a likely weaker Q2 outlook could pressure the stock; nonetheless, sees limited downside as FY26 EPS consensus is unlikely to fall materially.
More broadly, U.S. spirits faced another transition year as demand continues to slide, mirroring a similar decline in China. Younger U.S. consumers have been abandoning alcohol in favor of healthier lifestyle trends, further pressuring overall consumption.
At the start of this year, we cited a Goldman note that warned clients, "There is no sign of a bottom, with risks still skewed to the downside," for Diageo shares.
Tyler Durden
Thu, 11/06/2025 – 06:55