Rémy Cointreau: Some FY27 strategies outlined, but can Remy execute?

Research evidence excerpt

Rémy Cointreau: Some FY27 strategies outlined, but can Remy execute?

Barclays | Rémy Cointreau

mostly H2-weighted. The drivers of improvement will be overhead leverage (growing top-line

faster than costs) and A&P efficiency (redirecting spend rather than cutting it), not gross margin

expansion, which CFO Luca Marotta described as "less of a tool" this year given low but still

present COGS increases. On the results call, Marotta quoted FY26/27 company consensus at

+3% sales growth and +5.4% operating profit growth. Applying those to the reported COP

margin base of ~17.7% (multiplying by 1.054/1.03) suggests a c.40bp improvement on a

reported basis. The CFO's comment that this does 'not equate' to the slight improvement in

the guide implies current company consensus is too high. We have taken this into

consideration when updating our forecasts.

Updated US strategy with distribution reset, but recovery still gradual: We see the US as the

single biggest swing factor for FY27, with Remy reporting that it is gaining market share in Remy

Martin (+0.6pts). New leadership is in place, and Remy is transitioning to Reyes Beverage Group

as distributor. As outlined in our recent note on Pernod Ricard RTM changes (link to note), whilst

changes to distributors may reap longer term rewards, they are not without disr-uption.

Consequently, we see scope for disruption in early FY27 before things bed in. Remy intends to

focus its resources on the 5 states which represent ~80% of the US business. In addition, the

African American consumer base has moved more towards tequila and Remy says it intends to

focus on Asian Americans, high-net-worth individuals, and experience-driven occasions via DTC

and e-commerce. Overall for NorAm FY27 OSG, we forecast -4.9% in Cognac and +6.0% in L&S.