Diageo extends drop to 15% after cutting sales guidance

Diageo extends drop to 15% after cutting sales guidance

Diageo Extends Share Price Drop to 15% After Cutting 2026 Sales Guidance
February 25, 2026

Diageo (DGE.L) shares fell an additional 6.2% in morning trading on February 25, extending their decline to 15% year-to-date, following the company's announcement of a revised 2026 sales forecast and a significant dividend reduction. The UK-based spirits and beer giant, owner of brands like Johnnie Walker and Guinness, now expects organic net sales to decline 2%-3% in fiscal 2026, down from prior guidance of flat to slightly lower growth. This marks the second downward revision in three months, reflecting persistent weakness in key markets.

The company attributed the outlook to soft demand in the United States, where rising tariffs, inflation, and shifting consumer preferences—such as growing interest in ready-to-drink cocktails—have pressured sales. China's slowing white spirits market and fragile global consumer sentiment further compounded challenges. To fund its turnaround strategy under new CEO Dave Lewis, Diageo slashed its interim dividend to 20 U.S. cents per share, from 40.50 cents in the prior year, while maintaining a target of at least 50 cents for fiscal 2026.

Lewis, who assumed leadership in January, outlined plans to restructure Diageo's portfolio, including potential price repositioning and selective brand divestments, while emphasizing financial flexibility to reduce debt. However, operating profit growth guidance was also cut to flat to low-single-digit growth, down from previous expectations of low- to mid-single-digit gains.

Diageo's struggles mirror broader industry headwinds. Rivals like AB InBev and Pernod Ricard have reported similar sales declines in the U.S. and China, underscoring a global shift in consumption patterns. Despite a 10% share price rebound since January, Diageo's stock remains a key underperformer in the FTSE 100, as investors weigh the scale of required investments against uncertain market recovery timelines.

Reuters (https://finance.yahoo.com/news/diageo-shares-sink-cuts-guidance-115700782.html) Yahoo Finance / Wall Street Journal.