London, June 19, 2026, 12:04 BST
- Diageo was last seen at 1,534 pence, adding 0.33%, with the quote showing a 20-minute delay at 12:01 BST.
- CEO Dave Lewis is making senior executives hit cost-reduction goals, and an internal note on possible job cuts is coming next week.
- Bank of America said the company can recover but dropped its price target and trimmed EPS forecasts before the August strategy update.
Diageo shares ticked up Friday, beating the sluggish London market, with investors watching for early moves from new boss Lewis. The FTSE 100 slipped 0.05% to 10,394.30 by 0948 GMT, weighed by mining names and muted risk appetite.
The move was modest, but the update mattered more. Lewis looks to be shifting from talking about Diageo’s problems to acting on them after saying the company had lost ground in core markets. Now investors will have to watch if cutting overheads leaves room for both price cuts and brand investment, and whether that can happen without hitting cash flow or dividends.
Diageo CEO Lewis told executive committee members to cut staff and trim costs in each department, instead of setting one overall redundancy number, the Financial Times said. The report said non-revenue roles will likely see most of the reductions.
Diageo said it has started to redesign its operating framework. The company reports preliminary results for the year to June 30 and will roll out its strategy update on August 6. That’s when Lewis gets to put numbers and deadlines on the reset.
Bank of America in a note Friday called fiscal 2027 a transition year. The bank is modeling close to $400 million in gross reinvestment, with about $300 million linked to pricing, partially offset by $200 million in savings and lower agave costs. Bank of America projects a path to 3% sales growth and 6%–7% EPS growth in the medium term.
North America is still weighing on the case. Diageo’s third-quarter organic net sales edged up 0.3%, ahead of forecasts for a drop, but the company’s North American sales slid 9.4%. Lewis has cut some Casamigos tequila prices and called North America Diageo’s “biggest challenge.” Diageo
Richard Scrope, who manages the VT Tyndall Global Select fund, said after the May update, “It’s early days for Dave, but he does seem to be grasping it.” Scrope said he liked the growth in Europe and other markets, but he’s holding for the full plan in August. Reuters
Weakness isn’t just showing up at Diageo. Brown-Forman, which owns Jack Daniel’s, saw full-year net sales slip 1% this month. Organic sales were flat. The company is guiding for roughly flat organic revenue in fiscal 2027. Organic operating income is expected to drop 3% to 5%, signaling ongoing pressure on spirits demand in developed markets.
But just cutting costs might not fix things. Lower prices and marketing spend can hit margins before bringing in more sales, and sharp job cuts could hurt sales or service. If U.S. spirits keep falling for longer, Diageo could end up having to spend more just to hold its ground. That’s the central risk in the BofA recovery case.
August is still the key month for the shares. Investors want to see a clear savings goal, signs that North American volumes are steadying, and a solid plan to cut debt. Goodbody analyst Fintan Ryan said the earlier reset was “just the trailer” for the bigger strategy reveal; with the new cuts, the main event is underway, but there’s no clear ending yet. Reuters
