BNPP Exane View
The Q3 LFL sales decline (-21.5%) is not as steep as expected by consensus (co. cons. -23.7%) driven by the Cognac division. However, more importantly, while the sequential volume depletion trend for Remy Martin in the US has improved (-11.5% in Q3 vs. -11.9% in Q2) the improvement is very modest and therefore US wholesaler inventory levels remain broadly unchanged at ''slightly less than 5 months'' of depletions. We expect consensus EBIT estimates to be subject to modest (c.-1%) cuts on the back of a slightly reduced top-line outlook for FY25e. While the share price reaction is tough to call, combined with LVMH''s directionally cautious comments on the expected 2-year recovery of its Cognac and Spirits division yesterday evening, we call Remy Cointreau shares small down today.
Headline metrics
. Group LFL: -21.5% (co. cons: -23.7%)
. Group sales: EUR254.1m (+3.8% vs. co. cons.)
. Remy Martin LFL: -22.0% (co. cons: -27.0%)
. Liqueurs and Spirits: -20.1% (co. cons: -16.5%)
Top-line drivers
Scanning the top-line trends by division, the Q325 organic sales came in slightly ahead of company consensus expectations (-21.5% vs. co. cons -23.7%) driven by the Cognac division (-22.0% vs. co. cons -27.0%) which was partially offset by weaker trends in the Liqueurs and Spirits division (-20.1% vs. co. cons. -16.5%).
Bottom-line drivers
N/A - only a sales update.
Other metrics
. 9M Group LFL: vols -13.6%, price / mix -4.2%;
. 9M Cognac LFL: vols -14.7%, price / mix -4.3%;
. 9M LandS LFL: vols -12.2%, price / mix -2.7%;
. 9M value depletions: US down mid-teens (vols -HSD); China flat (Q3 +MSD); EMEA down MSD (Q3 +MSD);
. US Cognac: Remy Martin US volume depletions declined -11.5% in Q3 (cf. Q2 -11.9%, Q1 -32.3%) and were below Q320 by -34.3% (cf. Q2 -42.8%, Q1 -27.4%). Value depletions declined by mid-teens in Q3 (organic sales down v. strong DD%) with contrasted but promising trends among states (control states outperformed with almost stable volume with...
