Diageo’s Sales Hit Hard by Closing of Restaurants and Bars

(Bloomberg) -- Diageo Plc's sales slumped as the pandemic led to the closure of bars and restaurants, with rising e-commerce and supermarket purchases failing to fill the gap.

• Revenue fell 8% in the 12 months through June on an organic basis, the London-based company said Tuesday. Analysts expected a decline of 6.4%.
• The company recorded a 1.3 billion-pound ($1.7 billion) impairment due to Covid-19 effects.

Key Insights

• The results are somewhat worse than already low expectations, with the company saying in February that it would see organic net sales cut by 225 million to 325 million pounds ($294 million to $424 million) for the financial year.
• The company's beer business, which includes Guinness stout, joined rivals Anheuser-Busch InBev NV and Heineken NV in reporting a big drop in sales due to lockdowns.
• A silver lining comes from surging e-commerce, which doubled in the fourth quarter, Chief Executive Officer Ivan Menezes said on Bloomberg TV. Some of those gains are expected to persist beyond the pandemic as consumer habits change.
• Like many other consumer-goods companies, Diageo said it's unable to provide specific financial guidance, given the continued uncertainties around the pandemic and the global economy.

Market Action

• Diageo shares fell as much as 5.3% early Tuesday in London. They've dropped 14% this year.

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