Tariff Troubles Hamper Brown-Forman In Fiscal First QuarterAugust 28, 2019
For its first fiscal quarter ended in July, Brown-Forman reported that underlying net sales were flat at $766 million, as operating income dropped 8% on an underlying basis to $248 million. Lawson Whiting, Brown-Forman’s CEO and president, attributed the flat sales and declining profits to the impact of tariffs and customer order timing. While the global picture for the company has become more challenging lately, especially in European markets like the U.K. and Germany, Brown-Forman continues to show growth in the U.S., its largest market, with underlying sales up 4%. U.S. growth was driven by double digit gains for Woodford Reserve and Old Forester as well as the company’s Tequila labels.
Globally, Jack Daniel’s slipped 1%, due to tariffs and a dip in the brand’s core Tennessee whisky (-4%). Despite the drop, Whiting is confident that Tennessee Apple, an upcoming flavored offshoot, will help propel the brand to overall growth for the remainder of the fiscal year.
Jack Daniel’s portfolio of flavors and RTDs were all up single digits on an underlying basis for the quarter. Though facing challenging conditions globally, the brand’s net sales were up by low single digits in the U.S. According to Impact Databank, Jack Daniel’s was at just over 6.5 million cases in the U.S. last year, with retail sales totaling nearly $1.8 billion.
Meanwhile, Brown-Forman’s higher-priced whiskies, like Woodford Reserve and Old Forester, remain in strong growth. The company’s premium Bourbon portfolio was up 16% on an underlying basis. In Tequila, both Herradura and el Jimador reported solid underlying sales, up 22% and 10%, respectively.—Shane EnglishSubscribe to Shanken News Daily’s Email Newsletter, delivered to your inbox each morning.