Johnnie Walker Maker Diageo Tanks After Missing Estimates, Latin America Woes Deepen

In a recent development, the shares of Diageo Plc (NYSE:DEO) have taken a hit, dropping over 3%. This comes after the company, known for its Johnnie Walker whisky and Tanqueray gin, reported a decline in organic net sales, missing analyst estimates. The spirits giant also warned of further challenges in Latin America, where unsold stock accumulates.

What Happened: Diageo’s shares fell by over 3% on Tuesday, following the company’s warning of additional difficulties in Latin America, Reuters reported. This announcement has compounded investor concerns about the accumulation of unsold stock in the region, which may prove challenging to clear.

The company’s organic net sales experienced a slight decline, just missing analyst estimates. Diageo also noted a decrease in its largest market, North America, where it has been losing market share.

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Diageo’s CEO, Debra Crew, expressed dissatisfaction with the results and her determination to maximize the company’s potential. The company had previously warned of a sales decline of over 20% in Latin America and the Caribbean. The actual decline reported on Tuesday was 23%, with an expected further decrease of 10%-20% in the year’s second half.

Why It Matters: The recent troubles in Latin America add to a series of challenges faced by Diageo. In December, the company was reported to be considering the sale of its beer portfolio, excluding its flagship brand, Guinness, due to the portfolio’s negative impact on the company’s margins.

Then in January, the company’s partnership with American rapper Sean "Diddy" Combs came to an end after a legal dispute over the neglect of the DeLeón brand in favor of other tequila labels.

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