Diageo faces scrutiny from US regulator over supply concerns

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A spokeswoman for Diageo said it was “working to respond fully to the SEC’s requests for information in this matter”.

While it is unclear whether the US Securities and Exchange Commission has launched a full-scale investigation into the company, Diageo is thought to be under scrutiny over the practice, known as “channel stuffing”.

Channel stuffing involves booking sales ahead of actual orders, which can help to flatter results.

Nomura analyst Ian Shackleton said he understood there to have been no further enquiries to Diageo following a request in March for information on U.S. spirits sales over the past five years.

“We understand that the SEC often makes requests for information like this, which does not lead to any further action,” Shackleton wrote in a note.

Diageo, which also produces Guinness, makes 40% of its sales in the US.

 

A sales slide in the first half of the year had prompted Diageo to encourage its trade partners to de-stock, so that it could adapt better to consumer trends.

Figures this year have looked especially bad next to last year, when the drinks trade was stocking up on spirits over fears of a hike in duty.

Shares in Diageo were last down more than 2% at 1866p.

Additional reporting by Reuters

Source Article from http://www.standard.co.uk/business/business-news/diageo-faces-scrutiny-from-us-regulator-over-supply-concerns-10414103.html

July 25, 2015 |
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