NEWS ALERT: Amid Difficult First Half, TWE Maintains Positive U.S. Outlook, Names New CEOFebruary 20, 2014
Despite the challenges of the past six months, Treasury Wine Estates (TWE) is reporting a relatively positive outlook in the U.S. for its fiscal first half ended December 31, 2013. Concurrently, the company has named Michael Clarke managing director and CEO. Clarke, who most recently served as CEO of London-based Premier Foods PLC, replaces interim CEO and TWE board member Warwick Every-Burns.
For the first half, TWE Americas posted a 12.7% decline in shipments and 2.3% drop in depletions, as net sales fell 0.4% to A$361.8 million ($326m). But despite the sluggish performance, TWE’s four largest U.S. brands (Beringer Classics, Lindemans, Chateau St. Jean and Beringer Founders’ Estate) demonstrated solid volume growth, alongside strong gains from the company’s higher-end tiers.
“You’ll see the most growth from us in the above-$10 range, what we call our ‘masstige’ and luxury brands. Below $10, the focus will be on our big three—Beringer Classics, Beringer Founders’ and Lindemans—to make those bigger,” TWE Americas chief commercial officer Sandra LeDrew told SND. “We see real signs of progress behind these brands.”
According to Wayne Chaplin, president and chief operating officer of Southern Wine & Spirits of America, TWE America’s largest U.S. wholesaler, TWE’s priority brands (+3%) demonstrated strong momentum throughout the six-month period, with Beringer (+1.5%), Chateau St. Jean (+15%), Matua (+66%) and Souverain (+52%) posting solid depletion gains. TWE’s luxury portfolio (+8%), including its Penfolds (+157%), Stag’s Leap (+8%) and Etude (+32%) labels, also demonstrated notable growth, says Chaplin, adding that Southern expects to “accelerate depletions” in the second half.
Overall, it has been a challenging year thus far for TWE. The company’s first-half global volume was down 7.5% from the year-earlier period to 15.3 million cases, while net sales dropped 0.6% to A$811.9 million ($731m). In July, TWE made the decision to slash U.S. inventory and take A$160 million ($145.7m) in writedowns, a move that was followed by the ouster of CEO David Dearie in September. Last month, after suspending trading of its shares on the Australian Stock Exchange, the company downgraded its full-year earnings forecast to A$190-A$210 million ($217-$239m), from its original projection of A$230-A$250 million ($262-$285m).