By Andrea Figueras

French distiller Remy Cointreau cut its guidance for fiscal 2026 due to persisting challenges in China and the U.S. amid subdued demand and tariffs.

The maker of Remy Martin and Louis XIII cognac said Thursday that market conditions in China deteriorated, while the expected sales rebound in the U.S. was weaker than anticipated as the group continues to reduce stock levels.

The company now estimates organic sales to be stable or grow by a low-single-digit percentage in the year ending in March. It had previously forecast mid-single-digit growth. Against this backdrop, the group expects an organic decline in current operating profit--its preferred profitability metric--of between low-double digits and mid-teens, while it had previously anticipated a mid-single-digit decline.

The new forecast includes an estimated hit to profit of 25 million euros ($29 million) from tariffs, which compares with the 30 million euros it had previously estimated. Remy Cointreau estimated 20 million euros would come from the U.S. and 5 million euros from China.

Shares in Remy Cointreau were down 7.3% to 43.52 euros in European morning trading, adding losses to the 25% decline seen since the start of the year. Peers Pernod Ricard and Diageo also traded 0.8% and 1.3% lower, respectively.

Remy Cointreau is targeting a return to growth after a difficult period for the sector, marked by weak demand following a boom in alcohol consumption during the pandemic, and a weak Chinese economy that has hit the group's performance. European drinks makers have been grappling with tariffs in China and the U.S.

The liquor company booked sales of 489.6 million euros for its fiscal first half through September. This was below analysts' projections of 492 million euros, according to a poll of estimates provided by the company.

For the second quarter alone, the group posted an organic sales drop of 11%, worse than the expected 9.5% decline, according to the same consensus. The quarter likely marked the year's low point, the company said. Analysts had already anticipated a tough period due to challenges in China, a strategic market for the company, with no return to the strong growth of cognac characterized by the prepandemic rates.

Quarterly sales of cognac fell 13.5% organically, mainly due to weak trends in China.

Write to Andrea Figueras at andrea.figueras@wsj.com

(END) Dow Jones Newswires

October 30, 2025 06:15 ET (10:15 GMT)

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