LONDON (Reuters) -Remy Cointreau’s shares rose 6.8% on Friday after it reported a far smaller-than-expected fall in fourth-quarter gross sales, saying “important progress” in China helped drive a shock uptick at its cognac division.
Remy, which makes over 70% of its gross sales from cognacs akin to Remy Martin, has been grappling with troublesome circumstances in its two main markets, China and the US, forcing it to chop its full-year forecast in October.
Analysts had been anticipating it to publish a 3.4% decline in natural gross sales within the three months to end-March, with flat cognac gross sales at 0.5%. As an alternative, natural cognac gross sales grew 15.4%, bringing the group-level gross sales decline to simply 0.7%.
The corporate attributed the outcome to an “wonderful” efficiency in China, the place it mentioned it had applied quite a few advertising initiatives geared toward boosting gross sales in the course of the Lunar New 12 months festivities in February.
The massive celebration normally boosts liquor gross sales. It got here two weeks later this 12 months – a shift that additionally helped Remy within the fourth quarter.
Buyers in a number of sectors from drinks to luxurious items are fretting about Chinese language demand because the world’s second-largest financial system sputters.
Remy’s rival Pernod Ricard (EPA:) on Thursday pointed to a “gentle” Lunar New 12 months.
Barclays analyst Laurence Whyatt mentioned most client corporations have been downbeat on the Chinese language client and Remy’s gross sales progress was partially based mostly on elevated gross sales to wholesalers and retailers, so it remained to be seen if the agency might buck the development.
Nevertheless, issues in the US continued. U.S. retailers and wholesalers have been chopping costly booze from their inventories as extraordinary gross sales within the aftermath of COVID-19 have pale.
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Remy mentioned it noticed extra “main destocking” within the quarter, amplified by phasing results and extra intense promotions from rivals.
General, full-year gross sales within the Americas have been down 39.6% in consequence, versus 2% progress in Asia Pacific and 0.7% progress in Europe.
Group natural gross sales for the 12 months stood at 1.19 billion euros, a 19.2% decline versus a 12 months earlier and barely forward of analyst estimates.
Remy experiences full-year outcomes on June 6.
