Diageo lowers FY26 outlook on soft U.S., Chinese sales

[Red parrot pub]
Derick Hudson

Shares of British spirits producer Diageo plc (DEO [https://seekingalpha.com/symbol/DEO]) fell to their lowest level in nearly 14 years after warning that weakness in China and the U.S. will result in lower FY26 sales.

“We are not satisfied with our current performance and are focused on what we can manage and control; acting with speed to drive efficiencies, prioritizing investment and adapting more quickly to an evolving consumer environment, Diageo interim CEO Nik Jhangiani said.

The parent company of Johnnie Walker, Smirnoff, Guiness, and 11 others now expects organic net sales to be flat to slightly lower to incorporate the “adverse impact from Chinese white spirits and a weaker U.S. consumer environment than originally planned for.”

[Diageo brands]
Diageo brands (https://www.diageo.com/pdf-viewer.aspx?gid=307336661&src=%2F%7E%2Fmedia%2FFiles%2FD%2FDiageo-V2%2FDiageo-Corp%2Finvestors%2Fresults-reports-and-events%2Fannual-reports%2F2025%2Fannual-report-2025.pdf)

The guidance assumes an unchanged level of tariffs into the US from the UK at $200M pre-mitigation, with current UK tariffs remaining at 10%, and 15% on imports into the U.S. from the European Union. Additionally, spirit imports from Mexico and Canada remain exempt under the US-Canada-Mexico trade agreement. Diageo (DEO [https://seekingalpha.com/symbol/DEO]) expects to mitigate about half of this impact on operating profit on an ongoing basis.

For the fiscal first quarter, [https://seekingalpha.com/pr/20295962-diageo-plc-issues-fiscal-26-q1-trading-statement] Diageo’s (DEO [https://seekingalpha.com/symbol/DEO]) sales were down 2.2% to $4.875B, largely reflecting the negative impact of disposals, while organic sales were flat compared to last year, with organic volume up 2.9% offset by negative price/mix of 2.8%.

Along with the downbeat outlook, the company failed to provide any updates on the search for a permanent CEO. Jhangiani has been serving as interim CEO since July after the company ousted [https://seekingalpha.com/news/4467783-diageo-to-replace-ceo-after-price-slump---report]Debra Crew.

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