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Brown-Forman Sees Flat First Quarter In U.S., Due To Difficult Comparison With Last Year

August 27, 2014

Brown-Forman has reported an underlying net sales increase of 3% to $921 million across its global business for its first quarter ended July 31, but saw growth in the U.S. slow owing to a particularly strong comparable period a year ago. Underlying operating income rose 7% to $221 million. The company said last year’s first-quarter performance benefited from distributor and retail buy-ins ahead of price increases in the U.S., and added that it expects the pace of growth to ramp up over the course of the fiscal year.

“The reduction in inventory levels at both distributors and retailers (in the U.S. in the first quarter) resulted from the company’s decision to slow the rate of price increases versus each of the prior two years,” Brown-Forman stated. “In addition to more favorable inventory comparisons over the balance of fiscal 2015, the company expects continued improvement in volumes in this important market.”

Even with U.S. shipments stalling, Brown-Forman’s American whiskey range showed solid progress over the past three months, with Jack Daniel’s underlying net sales up 5%. The core Tennessee whiskey saw 1% volume growth in “underlying consumer takeaway trends” in the U.S. during the quarter, compared with a 1% decline over the last 12 months.

Meanwhile, Tennessee Honey continues to be a growth engine, with net sales up 29%, driven by “large gains in markets outside the United States,” as well as continuing progress stateside. The group’s super- and ultra-premium whiskey brands—led by Woodford Reserve, Jack Daniel’s Single Barrel and others—posted a collective double-digit increase, as did Tequila labels El Jimador and Herradura, which rose 15% and 20% respectively on strong sales in both the U.S. and Mexico.

Southern Comfort, meanwhile, remains under pressure from flavored whiskies and a weak on-premise environment, and saw net sales slip 7% for the quarter.

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