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Diageo Being Investigated By SEC

July 23, 2015

The Wall Street Journal reported this afternoon that the Securities and Exchange Commission is investigating whether Diageo has been over-shipping inventory in the U.S. market in order to boost its results. The report said Diageo confirmed that it has received an SEC inquiry and is “working to respond fully” to the Commission’s requests for information.

Diageo North America accounts for roughly one third of Diageo’s $17.6 billion in annual sales and approximately 45% of its operating profit.

Diageo, which reports its full-year results next week, has seen its sales decline recently in the U.S. market. Smirnoff’s volume fell by 3% to 9.5 million cases last year, according to Impact Databank, while Captain Morgan was off by 1.5% to 6.3 million cases and Crown Royal was up by just 0.7% to 4.28 million cases.

Diageo’s chief executive Ivan Menezes told analysts earlier this year that Diageo has been reducing its distributor inventories in order to “get better visibility on customer depletions.”

 

 

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