Treasury Wine Estates (TWE) has provided an update on its FY26 performance, withdrawing earnings guidance due to China softness and challenges in California.

TWE said Penfolds shipments in the first quarter of FY26 were in line with expectations across key markets globally, supported by the successful annual Penfolds Collection Release in early August.

However, softness in depletions in China that occurred during June and July have continued as a result of evolving consumption dynamics within the alcohol sector, with large-scale banqueting occasions particularly impacted.

While August depletions showed some improvement, TWE said that the Mid-Autumn Festival period would provide a clearer outlook of the likely performance trends through the remainder of the year.

Complete data for Penfolds performance through the period remains pending but “preliminary data indicates that depletions remain weak relative to plan”.

TWE said if the performance trends indicated by the preliminary data continue, Penfolds depletions targets for FY26 in China are unlikely to be achieved.

“As a result, TWE no longer believes it is appropriate to retain the Penfolds guidance for low to mid double-digit EBITS growth in FY26 and approximately 15% EBITS growth in FY27,” the company said.

“Several initiatives are now being implemented to mitigate the expected impacts in China in FY26, including pursuing opportunities to re-allocate product to select customers in other key markets in a manner that is sustainable and minimises the risk of parallel imports back into the China market.”

Guidance suspended for Treasury Americas

TWE said its Treasury Americas’ portfolio is performing well outside of California, with depletions growing ahead of the Luxury category, up more than 5% ex-California, led by DAOU, Frank Family Vineyards and Stags’ Leap.

In California, depletions were impacted by the distributor transition, including key account set-up activities in September.

As part of its F25 results announcement on 13 August, TWE stated that its expectation for modest EBITS growth in F26 for Treasury Americas was contingent on mitigating the impact of reduced shipments in California through negotiations with Republic National Distribution Company (RNDC), which was Treasury Americas’ incumbent distributor in California at the time and announced the closure of its operations in the state effective 2 September.

Additionally, TWE noted that the net financial impact from the Californian distribution change remained uncertain,
however it could advise at that point in time that it expected an adverse impact to Treasury Americas’ F26 operating plan NSR of approximately $50million.

The overall NSR and EBITS impact from the distribution change will remain uncertain until TWE finalised its transition planning and exit negotiations with RNDC in California, including the treatment of the remaining inventory ($100million
NSR value) currently held by RNDC in California.

Therefore TWE no longer believes it is appropriate to retain the guidance for modest EBITS growth in Treasury Americas in the year.

TWE suspends buy-back plan

As part of its FY25 results update in August, TWE announced an on-market share buy-back for up to $200million. By the end of September, $30.5million of shares had been bought back.

The company has decided the on-market share buy-back will now be paused until there is greater clarity around trading conditions and expectations.

TWE emphasised it retains a strong and flexible capital structure, with approximately $1billion of liquidity currently on hand “and with significant headroom to the financial covenants under its borrowing arrangements”.

Shares in TWE fell 12% on Monday following the announcement.

The company’s Annual General Meeting will be held on 16 October.