Dive Brief:
- The Securities and Exchange Commission has launched an investigation into whether Diageo Plc has been shipping more inventory to its U.S. distributors than they originally asked for, according to The Wall Street Journal sources.
- The thought is that Diageo could be shipping out excess inventory so the company can report higher sales and shipments numbers, the sources said.
- Diageo confirmed that it received an SEC inquiry about the company's U.S. distribution and said that the company would fully cooperate with the inquiry, according to The Wall Street Journal.
Dive Insight:
North America is a hot commodity for Diageo, generating about one-third of the company's sales and around 45% of operating profit.
While Diageo saw shrinking sales overall for the first three quarters of this fiscal year, the company reported a nearly 1% uptick in sales in North America for the third quarter. Since, Diageo has been shaking up management in its North America segment, including appointing a new CMO and moving the company's CFO to president of Diageo North America. It remains to be seen how this investigation will play out as new management enters and positive sales numbers arise in Diageo's North American market.
Diageo will report fourth-quarter and full-year earnings results July 30.