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Jack Daniel’s Drives Brown-Forman To Solid Sales, Profit Growth

March 4, 2015

Achieving solid sales and profit increases in the first nine months of its fiscal year, Brown-Forman reaffirmed its underlying growth outlook for the full year. However, with the company now doing nearly 60% of its business outside the U.S market—up from well less than 40% a decade ago—the strengthening dollar has led the Louisville, Kentucky-based drinks marketer to slightly reduce its per-share earnings projections.

For the nine months ended January 31, Brown-Forman’s net sales increased 3% (+5% on an underlying basis), while reported operating income increased 2% (+7% on an underlying basis), and diluted earnings per share increased 4% to $2.54.

The company’s underlying net sales in the U.S. grew by 7% during the first three quarters of its fiscal year, while underlying sales in other developed and emerging markets advanced by 4% and 6%, respectively. The Jack Daniel’s range was up 8%, with growth driven by Jack Daniel’s Tennessee Honey, whose sales jumped by 32% thanks to expansion into new locations and continued growth in established markets. Brown-Forman’s stable of super- and ultra-premium whiskies also enjoyed significant progress, and have collectively sold more than 1 million cases over the past 12 months. Both Finlandia and Southern Comfort endured sales declines—Finlandia largely because of tax hikes in Poland (its biggest market) and Southern Comfort due in part to increased competition in the flavored whisk(e)y segment. Brown-Forman has been a leader in that category with Tennessee Honey. Additionally, the company announced yesterday that its Jack Daniel’s Tennessee Fire liqueur—which squarely targets fast-rising rival Fireball—will roll across the U.S. market this month, following a test run in eight states.

For its full fiscal year (ending April 30), Brown-Forman has reaffirmed its targets of 6%-8% growth in underlying net sales and 9%-11% growth in underlying operating income.

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