Diageo Reshuffles Top Ranks --Update

By Saabira Chaudhuri 

Diageo PLC is reshuffling its top ranks as it moves to shore up sales in North America, its most important market.

The spirits maker's American chief financial officer Deirdre Mahlan will return to the U.S. as Diageo's head of North America. Diageo didn't say who would replace Ms. Mahlan, but a person familiar with the company said an external search for a new CFO has already commenced.

The world's biggest liquor company by sales said earlier this month that Larry Schwartz, who has headed its North America unit since 2012, would step down at the end of this year. Ms. Mahlan will move to her new role once a replacement has been found.

The moves come as Diageo's sales in North America have slumped in recent years. In the six months ended Dec. 31, North America, which is easily Diageo's biggest and most profitable region, logged flat sales on an organic basis, down from 5% growth for the comparable six months in 2013.

"Diageo North America is a strong business and we are determined to deliver on that strength," said Chief Executive Ivan Menezes.

While Ms. Mahlan is well regarded for her financial capabilities, analysts on Tuesday questioned whether she has is equipped to lead North America out of its malaise.

"I would have some questions on her ability to make a major difference in reversing the performance of some of Diageo's big brands in the U.S.," said Exane BNP Paribas analyst, Eamonn Ferry. "It is an extraordinarily difficult task."

Ms. Mahlan came to Diageo as part of its acquisition of Seagram Co.'s drinks business. She previously worked as Diageo's CFO for North America but has been based in London since 2007, as head of tax and treasury, then as deputy CFO and finally as CFO.

North America is a key market for the spirits maker, delivering 45% of Diageo's operating profit last fiscal year. Diageo on Tuesday also announced a number of other smaller organizational changes at the North America unit.

Write to Saabira Chaudhuri at [e-mail]

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