Diageo PLC (DEO, DEO.L) saw its stock drop 12% in a single week as weak international sales and revised full-year guidance sparked investor unease. The decline marks one of the steepest weekly falls in the consumer staples sector this year.
- Diageo stock dropped 12% week-over-week, closing at $118.30
- Underlying sales declined 1.8% YoY, missing forecasts by 70 bps
- Adjusted EPS of $1.27 below $1.32 consensus
- Full-year organic growth forecast reduced to 2–3% from 3–5%
- Market cap lost ~$15 billion in one week
- Dividend remains unchanged with 3.5% yield
Diageo's shares fell sharply, closing at $118.30 on Friday, down $16.45 from the previous week’s close, following a disappointing earnings report and revised outlook. The company reported a 1.8% year-over-year decline in underlying sales for the quarter, missing analyst expectations by 70 basis points, with significant underperformance in Europe and Latin America. Adjusted earnings per share came in at $1.27, below the $1.32 consensus forecast. The decline was driven by weaker demand in premium spirits, particularly in the UK and France, where inflationary pressures and reduced discretionary spending have impacted consumption. Diageo also lowered its full-year organic sales growth forecast to 2–3%, down from the prior 3–5% range, citing macroeconomic headwinds and competitive pressures in key markets. Investors reacted swiftly, with market capitalization dropping by approximately $15 billion over the week. The sell-off has rippled through the consumer staples sector, with rival firms such as AB InBev and Pernod Ricard also seeing modest declines. Analysts note that Diageo’s dividend, yielding 3.5% as of the latest data, remains intact, but the revised guidance has raised concerns about long-term sustainability amid shifting consumer behavior. The impact extends beyond equity markets, affecting currency exposure and investor sentiment toward European blue-chip stocks. Institutional investors have begun reassessing their exposure to global consumer discretionary and staples equities, particularly those with high international revenue concentration.