Shares in Guinness brewer Diageo (DEO) were 0.5% merrier today after its chief executive Debra Crew failed the Jurgen Klopp test and stepped down from her role after only two years in the job.
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Price Plunge
Former Liverpool football manager Jurgen Klopp once said: “It’s not so important what people think when you come in… It’s much more important what people think when you leave.”
Since Crew took on the top job at the home of Johnnie Walker whisky and other major global brands, the Diageo share price has staggered lower. In the last 12 months it is down nearly 24%.
The share price lift on the news that Crew had stepped down with immediate effect indicates how downbeat investors were during her tenure. She will be replaced on an interim basis by finance chief Nik Jhangiani.
Gone Dry
Crew has overseen a profits warning back in 2023 after slumping Latin American and Caribbean sales, supply chain woes as supplies of Guinness ran dry in the U.K, last Christmas and a general move by people living healthier lifestyles with less alcohol consumption.
The threat of Trump tariffs is another headache for the firm given its global presence.
Crew did identify that work needed to be done to get the company back on a straight line. It is in the middle of a turnaround drive and in May unveiled its Accelerate plan which aims to cut $500 million in costs and make substantial asset sales by 2028.
It also hopes to deliver $3bn in free cashflow per annum from fiscal year 2026, increasing as the business performance improves.
As one can see below its cashflow performance has also ebbed and waned over the last few years.
“Debra has had a tough couple of years at the helm of Diageo and hopefully some new leadership will help to reinvigorate the company,” said Fred Mahon, fund manager at Diageo investor Church House.
Is DEO a Good Stock to Buy Now?
On TipRanks, DEO has a Moderate Buy consensus based on 2 Buy ratings. Its highest price target is $145. DEO stock’s consensus price target is $138, implying a 35.93% upside.
