By Dominique Vidalon
PARIS (Reuters) - French spirits group Remy Cointreau (PA:RCOP) posted a worse-than-expected 11.3% fall in third quarter like-for-like revenues, as demand for cognac in Hong Kong was impacted by protests in the region.
Slow stock replenishment in the United States, as well as changes in distribution contracts in Europe, also impacted Remy's third quarter.
These negative factors more than offset a robust performance in mainland China, where the Lunar New Year, a crucial moment for the drinks industry in that country, starts on Jan. 25.
This year's event will, however, take place amid rising concern about a coronavirus outbreak in the country which could also hurt sales of high-end brands exposed to China.
China, where Remy Cointreau makes an estimated 20% of its profits, is a key market for Remy, along with the United States.
The group, which makes the Louis XIII luxury cognac that sells for over $2,000 a bottle, would be particularly vulnerable to a slowdown in China, analysts have said.
Group sales reached 290.2 million euros (244.98 million pounds)in the three months to Dec. 31, showing a like-for-like decline of 11.3%. This compared with average expectations for a 6 percent decline in a company-compiled poll of 16 analysts.
Cognac sales alone fell 7.6%, worse than analysts' expectations for a 2.3% decline.
GUIDANCE ON HOLD AS NEW CEO ARRIVES
In December, Richemont's Eric Vallat replaced Valerie Chapoulaud-Floquet as Remy CEO. Chapoulaud-Floquet had been the architect of Remy's push towards higher-priced spirits to drive profit margins.
The group's share price has more than doubled since Chapoulaud-Floquet, a luxury sector specialist, took over in September 2014 with a strategy focused on selling spirits priced at $50 or more a bottle. The strategy had also benefited from a rebound in Chinese demand.
The group said it had decided to hold off on previously provided annual and mid-term goals, but it was nevertheless confirming "the pertinence of its value strategy".
The publication of the annual 2019/20 results on June 4 will be the occasion to provide a new strategic roadmap, added Remy.
