Drinks maker Diageo cut its full-year sales and profit forecasts amid weakness in key overseas markets.

The Johnnie Walker and Guinness owner expects 2026 organic net sales to be flat to slightly lower. It said this includes adverse impact from Chinese white spirits and a weaker-than-expected US consumer environment. Organic operating profit growth is expected to be low to mid-single digit.

For the first quarter, Diageo said organic net sales were flat.

Interim chief executive Nik Jhangiani said: “We are not satisfied with our current performance and are focused on what we can manage and control; acting with speed to drive efficiencies, prioritising investment and adapting more quickly to an evolving consumer environment.

“We are well advanced in sharpening our strategy, and we are developing and already implementing clear plans to drive growth across the broader portfolio, ensuring that we meet relevant consumer occasions of the future.

“Early results from our initiatives to strengthen our commercial execution capabilities, notably in Europe, are encouraging, and we are embedding a more rigorous performance-driven culture across the business.”

Sainsbury’s

Supermarket chain Sainsbury’s expects annual retail underlying operating profits of more than £1bn and stated that it will add an extra £150m from the sale of its banking unit to share buybacks this year and in 2026/27.

The company delivered a 0.2% rise in retail underlying profit to £504m for the 28 weeks to 13 September. It declared 5% increase in the interim dividend of 4.1p.

It said it is making good progress with the Argos transformation plan, with higher sales, market share growth and improved profitability, particularly against a second quarter last year.

Nick Sherrard, managing director of Label Sessions, said: “Sainsbury’s continues to defy expectations. Only a couple of years ago, the supermarket [chain] was being written off as the cost-of-living crisis took its toll on consumer spending, while Argos was performing far below expectations.

“”Now, though, Sainsbury’s is one of the UK’s best performing supermarket brands. It has successfully carved out its proposition, staved off competition from cheaper alternatives, grown its market share, and strengthened its brand. All of that is reflected in today’s rise in sales and profits coming in ahead of expectations.

“There is a lot to like about Sainsbury’s at the moment – and it is in the strongest position it has been for some time. That said, it is more prone than many of its peers to consumer sentiment and, with tax rises seemingly an inevitable feature of the Budget later this month, that could act as a brake on momentum in the near term.” 

Dan Coatsworth, head of markets at AJ Bell, said: “Its latest results give the impression of a business in a sweet spot. Profit guidance has been upgraded, it has announced a special dividend and a boost to its share buyback scheme, and the dividend has gone up by more than the rate of inflation.

“So far, so good, but the market dynamics are constantly shifting. Asda is determined to stage a comeback, and the prospect of a price war means it is one to watch. Tesco continues to nudge up its market share, and Lidl is quietly becoming a much stronger player, according to industry data.

“It begs the question of how Sainsbury’s is going to meaningfully move its share of the grocery sector beyond the current level.

“Sainsbury’s shares have enjoyed a good run since April, but the lacklustre market reaction to its half-year results would suggest investors might be starting to wonder if the supermarket has reached its peak.”

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