Smirnoff Parent Diageo’s Stock In Spotlight After Company Warns of $200M Impact From Trump Tariffs: Retail’s Extremely Bearish

The impact would impact mainly its tequila products, which must be made in Mexico

Shares of spirits company Diageo plc ($DEO) were in the spotlight as the company warned about a potential impact of $200 million to its second half operating profit as a result of Trump's imminent Mexico and Canada tariffs, dragging down retail sentiment.

The impact would impact mainly its tequila products, which must be made in Mexico, and also Canadian whisky, said the company.  

Diageo on Tuesday withdrew its medium-term guidance of organic net sales growth of between 5% and 7% due to the current macroeconomic and geopolitical uncertainty in its key markets.

According to analyst firm Jefferies, nearly half of Diageo’s U.S. sales come from imports from Mexico and Canada. President Trump on Monday agreed to pause for 30 days his plans to levy 25% tariffs on Canada and Mexico imports.

The impact of Trump tariffs are expected to impact its key supply chains, said the company, which said it is now taking a number of initiatives to mitigate the tariff impact and disruption to its business that tariffs may cause, according to an interim update on its first half fiscal performance.

“We will also continue to engage with the U.S. administration on the broader impact that this will have on everyone supporting the U.S. hospitality industry, including consumers, employees, distributors, restaurants, bars and other retail outlets,” Debra Crew, Diageo’s CEO, said in a statement.

However Chew assured that it was confident about a favorable industry fundamentals and its ability to outperform. Diageo declared interim dividend of $40.5, according to the statement.

For the first half, it expects net sales to be about $10.9 billion, down 0.6% due to unfavorable foreign exchange, and partially offset by an increase in organic net sales. Its organic net sales returned to growth and increased by 1%, driven by a positive price/mix of 1.2pps, according to the company.

"Our fiscal 25 first half results marked a return to growth, delivering organic net sales growth of 1% despite a challenging industry backdrop as consumers continue to navigate through inflationary pressures. Growth in four of our five regions was supported by market share gains," said Crew.

Sentiment on Stocktwits dropped further in the ‘extremely bearish’ category. Message volumes remained ‘high’.

Diageo’s brands include Ketel One vodkas, Casamigos, DeLeon and Don Julio tequilas, Captain Morgan,Tanqueray and Guinness.

Diageo stock is down 8/8% year-to-date.

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