Remy Cointreau has today forecast a bigger-than-expected drop in full-year sales, citing a very slow recovery in the US market, where inflation and the threat of tariffs have hit demand for spirits.
The maker of Remy Martin cognac and Cointreau liqueur said it expects sales to decline by between 15% and 18% in its fiscal year ending in March, a bigger drop than the 10.6% forecast in an LSEG consensus of analysts.
The French firm has been forced into repeated cuts in its guidance amid steep, persistent declines in cognac sales, causing its shares to tumble by around two thirds this year to their lowest since 2016.
Remy in October abandoned hopes for a sales recovery this year amid ongoing problems in the US in particular, where high interest rates and inflation have led stores to reduce spirits stock.
Cost cuts, which helped cushion the blow to first-half operating profit, would continue in the second half of the year, the group said. Its first-half profit fell by 17.6% on an organic basis, versus a 20.6% decline expected by analysts.
Apart from US weakness, sales have also been slow in China due to a sluggish economy.
The US and Chinese markets drive the majority of cognac sales, which account for around 70% of Remy's revenue.
Beijing has imposed steep tariffs on European Union brandy as part of tit-for-tat measures after the bloc voted for tariffs on Chinese-made electric vehicles.
Remy has already said it will hike prices to offset the impact. Rival cognac maker Hennessy, owned by luxury goods firm LVMH, this week suspended a plan to bottle its brandy in China to avoid tariffs, after hundreds of workers went on strike to protest the move.
US President-elect Donald Trump's threatened universal tariffs of 10% on foreign products would deliver a further blow to Remy's US business.
But CEO Eric Vallat said today that the company would be able to handle a 10% tariff on foreign goods, mainly via cost cuts, if imposed by incoming US President Donald Trump.
"10% is not going to kill is for sure," Vallat said, adding there would be a negative impact but not as significant as that of tariffs currently imposed on its products in China.
