Diageo is expected to make deep job cuts

Diageo plc (DEO) CEO Dave Lewis has directed management to cut their teams by 20% to 30%, according to Reuters.

The dramatic cuts ordered by “Drastic Dave” were anticipated by some when he took the CEO job in January amid share price struggles for Diageo (DEO). Sources indicate that Lewis issued the job reduction directive at a meeting with Diageo's (DEO) business leaders in Edinburgh, Scotland.

Diageo's (DEO) struggles have been linked to the macroeconomic environment and changing consumer habits, especially among Gen Zers who prefer non-alcoholic beverages. The proliferation of weight loss medication is also siphoning off demand towards healthier options. Since the end of the pandemic, a steady drop in alcohol consumption has eroded Diageo’s (DEO) sales and resulted in a share price decline of more than 50%.

Earlier in the month, Seeking Alpha analyst Mare Evidence Lab issued a Buy rating on Diageo (DEO) on the view that the market is pricing the company as if the US lower sales are permanent. "However, this might be cyclical rather than structural. Q1 2027 results will be another catalyst to watch," noted Mare Evidence Lab.

Shares of Diageo (DEO) rose 1.7% in premarket trading to $84.98 vs. the 52-week range of $72.45 to $116.41. The dividend yield for new buyers of the stock is 3.97%.