Pernod Ricard’s sales hit by weakness in US, China

Core Viewpoint - Pernod Ricard's first-quarter sales have declined significantly due to inventory adjustments and macroeconomic challenges in the US and China, with organic net sales dropping 7.6% and reported sales down 14.3% to €2.38 billion ($2.77 billion), underperforming analyst expectations [1] Sales Performance - Analysts had predicted a 6.2% drop in organic sales, while the consensus estimate was a 7.1% decline [2] - Organic sales in the Americas fell 12% to €641 million, exceeding Bernstein's forecast of a 5% decline, with US sales specifically down 16% [2] - The group expressed encouragement regarding improving sell-out performance in the US, although the spirits market remains subdued [2] Inventory Adjustments - US sales were impacted by expected inventory adjustments, with a noted risk of further de-stocking as volumes decline [3] - CFO Hélène de Tissot indicated it is too early to provide specific expectations for the US market as the season is just beginning [3] Market Challenges - In China, organic sales dropped 27%, with the Asia and Rest of World market declining 7% to €991 million [4] - The company noted a challenging macroeconomic environment in China, with soft demand during the summer and Mid-Autumn Festival, particularly affecting on-trade sales [5] Global Travel Retail - The global travel retail segment saw a 15% organic sales decline in the first quarter, attributed to the suspension of duty-free sales in China due to a Cognac anti-dumping investigation, along with weak sales outside of China [6]