AUS/US: Treasury Wine Estates to take US$145m hit on US stock clear-out
TWE is set to refresh its US stock
Treasury Wine Estates (TWE) has announced plans to destroy its old and out-of-date stock in the US, which it estimates will result in a AUD160m (US$145.7m) hit to fiscal 2013 pre-tax profits.
In a regulatory filing today (15 July), the Melbourne-headquartered group said it is working with US distributors to clear their “excess, aged and deteriorating” inventory. TWE, which demerged from the Foster's Group in 2011, said the move is ensure “the freshest and highest quality wines are available for brand conscious US consumers”.
The write-down represents more than the company's net profits in its last fiscal year, which totalled AUD90m.
David Dearie, TWE's chief executive said: “TWE’s leadership team in the Americas believes old and obsolete product is limiting the company’s growth ambitions.
“As such, decisive action must be taken to address these barriers to growth, and I am confident that the steps we are taking support our long-term growth agenda.”
Among the reasons for the excess, Dearie flagged “ambitious forecasting of new commercial product launches”.
Earlier this year, Accolade Wines' North America MD told just-drinks that Australian wines had been suffering in the US as other regions had muscled in on the "value" end of the market.
TWE estimated that the move will also cut its 2014 profits by around AUD30m.
The group's share price on the Australian Securities Exchange today closed down 12.2% at AUD5.11.
In Febraury, TWE reported a slide in first-half profits and sales.
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