Brown-Forman’s Net Sales Fall By 3% In H1 As Strong Dollar Negates Underlying GrowthDecember 2, 2015
Brown-Forman achieved strong underlying sales growth in the first half of its fiscal 2016, but the strong dollar hurt the company’s performance outside the U.S., where it now does 60% of its business. While Brown-Forman’s underlying net sales rose by 6% in the six months ended October 31, 2015, reported net sales fell by 3% to $1.995 billion. Similarly, the Louisville-based drinks marketer’s operating income was adversely impacted by the currency exchange effect, as it inched up 1% to $529 million.
The Jack Daniel’s family of brands saw a 7% underlying net sales increase (-2% reported), while the flagship brand’s Tennessee Honey offshoot grew underlying net sales by 14% (+1% reported). Meanwhile, the company’s super- and ultra-premium whiskey brands—led by Woodford Reserve—garnered a 28% jump in underlying net sales (+29% reported). The El Jimador family of brands, including the New Mix RTD range, also posted solid underlying sales growth, at 17% (-1% reported).
The struggles continued in the first half for Finlandia vodka and Southern Comfort, both of which lost ground on both an underlying and reported basis.
Regionally, Brown-Forman enjoyed strong underlying sales growth in the U.S. (+7%), emerging markets (+8%) and developed markets outside of the U.S. (+6%). However, in the latter two segments, sales were down on a reported basis—by 11% and 6%, respectively.Subscribe to Shanken News Daily’s Email Newsletter, delivered to your inbox each morning.