Treasury Wine shares soar as US supply overhaul eases inventory concerns

Treasury Wine Estates Ltd shares jumped nearly 8% on Monday after the company unveiled a comprehensive overhaul of its U.S. operations to address excess inventory and faltering demand, while simultaneously raising its fiscal 2026 earnings forecast. The stock soared as high as 7.9% to A$5.86, its peak since early December 2025, before settling.

Despite announcing a substantial A$558.4 million post-tax impairment charge linked to its U.S. activities, investors were more captivated by the company's decisive actions to align supply with demand. Treasury Wine disclosed plans to shrink the North Coast vintages from 2026, including fallowing vineyards to reduce grape intake.

Additionally, the firm vowed to write down inventory, primarily bulk wine, and dispose of excess stock via bulk-market sales and internal reclassification. These measures followed a strategic review of the Americas business initiated in June, prompted by declining demand that left Treasury Wine with surplus capacity and elevated inventory levels.

The company is set to continue this assessment, engaging advisers to explore options for its U.S. brand portfolio, operational model, and assets. The latest charge adds to a staggering A$770.5 million impairment recorded in the first half of fiscal 2026, bringing total U.S. asset impairments to approximately A$1.33 billion. Despite this significant write-off, Treasury Wine anticipates fiscal 2026 unaudited EBITS, excluding material items, to be A$492.3 million, surpassing its earlier guidance range of A$480 million to A$490 million.

The company also reaffirmed that fiscal 2027 EBITS should be at least equal to fiscal 2026 levels. While the largely non-cash nature of the writedowns and the more proactive approach to reducing U.S. supply helped investors overlook the headline charge, the moves underscore the broader predicament facing wine producers as weaker consumption and surplus supply strain the global market.