Rémy Cointreau's CEO said he aimed to end the year with a "sound" level of stock in the United States but it was unclear when these would start to move, after reporting a 43% fall in first-half operating profit.
High levels of unsold inventories in Rémy's key market have become a key issue for watchers of the French spirits group, which makes Rémy Martin cognac and Cointreau liqueur, after they contributed to a cut in full-year guidance in October.
Americas, led by the United States, account for about half of the group's sales and the US market is critical for its overall performance.
The company's US sales have fallen as retailers and wholesalers try to clear their elevated inventories following a post-pandemic boom for Rémy.
That was exacerbated by a squeeze on their finances that left them less willing to hold Rémy's slower-moving brands, and heavy discounting from competitors.
Chief executive Eric Vallat told journalists the group still had around five months' worth of stock in the US market, and while demand was improving it was unclear when sales from wholesalers to retailers would pick back up.
"The goal is to end the year with sound stocks," he said, adding this would mean around three or four months' worth.
Rémy's shares fell just over 1% at market open but recovered to trade around 3% higher by 08:15 GMT.
First-Half Performance
The group's operating profit for the six months to 30 September fell 43% to 169.1 million euros ($185.64 million), in line with analyst expectations in a company-compiled poll.
It already reported a 22.2% drop in first-half sales. Out of a €100 million ($109.47 million) cost-cutting plan announced in October, it had so far achieved €25 million, the group said.
Charles de Riedmatten, fund manager at Myria AM, a Rémy investor, said this was low and Rémy could struggle to control its marketing costs.
"For H2, I will be really cautious," he said, adding the US market in particular remains difficult and its not clear when it will improve.
Rémy reiterated its full-year forecast, saying the US would not see growth in sales before the next financial year.
Vallat also said that it believes an acquisition of a tequila brand could be complementary for the company, but right now its focus is on organic growth.
The French spirits group could easily make an acquisition of more than $1 billion with its current balance sheet, but would need to seek additional resources for anything larger, chief financial officer Luca Marotta added.
