Remy Cointreau First-Quarter Sales Drop 19%

PARIS-Remy Cointreau SA said Friday its first-quarter sales fell 19%, highlighting the struggle the group faces to revive growth amid a deep sales slump in China.

The French maker of Remy Martin cognac said sales fell to 214.8 million euros ($290.5 million) from EUR263.7 million in the three months ended June 30 as a crackdown on corruption in China continues to dent demand for high-end sprits such as Cognac.

Remy Cointreau is exiting a difficult year that saw its net profit halve, hit by a dramatic slide in sales in China. The company has been among those hardest hit by Chinese President Xi Jinping's anticorruption drive, which has undermined the long-standing tradition of gift-giving and fancy dining that had previously propelled sales of Remy's pricey cognacs.

Remy Cointreau still showed signs of optimism for the year ahead. The group confirmed its full-year goal of posting organic growth in both revenue and operating profit for its 2014-2015 financial year. That target, however, excludes the loss of a distribution contract in the U.S.

On an organic basis, stripping out the impact of currency moves, acquisitions and disposals, as well as the U.S. contract loss, revenue fell 5.7% in the first quarter.

The task to revive growth will be led by incoming chief executive Valerie Chapoulaud-Floquet. The Moet Hennessy Louis Vuitton LVMH (MC.FR) executive will officially take over as CEO in September, almost eight months after her predecessor left the company.

Write to Ruth Bender at [e-mail]

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