Diageo’s (LON: DGE) workforce shrank by 1,922 positions in the fiscal year ended June 30 — full-time-equivalent headcount fell from 29,860 to 27,938, a 6.4% reduction — as new CEO Dave Lewis pressed ahead with a cost-cutting campaign that’s already earned him a nickname, “Drastic Dave.”
Since Diageo doesn’t expect most regional cuts to wrap up until September 1, the final headcount hit may end up larger than what’s been disclosed so far. The company declined to detail the reductions further when Reuters asked.
Lewis took over as CEO in January; the “Drastic Dave” nickname followed him from cost-cutting stints at Tesco and Unilever. He’s aimed this round of cuts at what he calls “massive duplication” in the company’s back-office functions, part of a pledge to strip $1 billion in costs from the business over three years.
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The company booked $0.9 billion in restructuring charges for the fiscal year, roughly 70% of it tied to rolling out a new operating framework the company expects will generate another $850 million in savings over the following two years. Reuters reported in July that some individual teams were losing 20% to 30% of their staff as the overhead reductions took hold.
Separately, the company took a $1.5 billion impairment hit, most of it tied to Turkish hyperinflation accounting rules and a repricing in that market, plus a write-down of the Don Papa rum label. In his own comments accompanying the results, Lewis said the company remains “focused on recovering our competitiveness” in North America, where sales fell 8.4% for the year even as overall net sales slipped 2% to $19.6 billion.
Guinness offered a rare bright spot, with global sales up 12% and the broader beer category up 5%. Diageo has said it plans to double the brand’s production capacity as part of a £3.7 billion investment push, including $1 billion earmarked for the stout specifically.
