Remy Cointreau, renowned for its luxury brands like Remy Martin cognac and Cointreau orange liqueur, is gearing up to tackle ongoing challenges in the U.S. market. Anticipating a continued effort to clear out excess inventory, the company is bracing for a prolonged process that is expected to spill over into the new fiscal year. Despite facing headwinds, Remy Cointreau remains steadfast in its commitment to orchestrating a return to sales growth.
CEO Eric Vallat echoed this sentiment, acknowledging the hurdles encountered during the previous fiscal year while emphasizing the company’s resolute determination to revive its performance in the crucial U.S. market. However, the journey ahead is fraught with challenges, particularly as the U.S. experiences a normalization in drinks consumption following the initial surge witnessed post-pandemic, resulting in lingering high inventory levels that continue to weigh on the company’s results.
For Remy Cointreau, the fiscal year ending March 31 saw a notable decline in current operating profit, with figures dropping by approximately 28% on an organic basis compared to the previous year. Despite this decline, the company managed to exceed analysts’ forecasts, showcasing its resilience amidst a challenging market landscape.
The heart of the issue lies in the significant drop in cognac sales within the Americas, primarily driven by ongoing inventory reductions. Chairwoman Marie-Amelie de Leusse shed light on the continued efforts to trim stock levels, underscoring that demand has yet to fully rebound, necessitating further adjustments in the near term.
Meanwhile, in China, where spirits have been navigating a complex market environment marked by soft consumer sentiment, Remy Cointreau managed to make notable progress. Looking ahead, the company anticipates that the first half of the fiscal year ending March 2025 will be impacted by ongoing inventory adjustments in the Americas. However, there’s optimism for a return to robust sales growth, with projections indicating a resumption of high single-digit average annual growth from fiscal 2026 onwards.
Despite the prevailing challenges, Remy Cointreau remains committed to its long-term objectives, including the pursuit of high single-digit annual sales growth and a gradual improvement in current operating profit margin. The company’s proposal of an ordinary dividend of €2.0 per share underscores its dedication to delivering value to shareholders.
In essence, Remy Cointreau’s strategic focus on recovery and long-term growth underscores its resilience and determination to navigate through market headwinds, emerging stronger and more resilient in the process.