Brown-Forman Posts Rising U.S. Sales, But Tempers Outlook On Global ChallengesMarch 4, 2020
Brown-Forman has reported that underlying net sales were up 3% to $2.7 billion for the first nine months of its fiscal year ended in January. The company’s operating income dropped by 1% to just over $900 million in the same period. Sales in the U.S. were stronger, up 6% on an underlying basis, with emerging markets matching the U.S. and developed international markets up 2%. For its fiscal third quarter, Brown-Forman’s net sales were up 3% on an underlying basis to just under $900 million.
The company’s gains were driven by a successful launch for Jack Daniel’s Tennessee Apple and solid growth for Jack Daniel’s RTDs (specifically in the U.S. and Germany). Those offerings—plus the continuing momentum of Tennessee Honey—pushed the Jack Daniel’s family of whiskies up 3% on an underlying basis in the nine-month period.
Brown-Forman’s premium-and-above whiskey portfolio was also up (22%), with Woodford Reserve and Old Forester leading the way. According to Impact Databank, Woodford Reserve increased 22% to 792,000 cases in the U.S. last year, while Old Forester rose 22% to 271,000 cases. Outside of whiskey, Brown-Forman’s Tequila brands saw net sales rise 10%, including 20% and 11% increases for Herradura and El Jimador, respectively.
Brown-Forman’s travel retail and non-branded businesses declined over the first nine months of the fiscal year. Travel was down 3% with a decline in Jack Daniel’s offsetting growth from Woodford Reserve. Brown-Forman’s non-branded unit (including used barrels, bulk whiskey, and contract bottling) showed a substantial 27% decrease on an underlying basis, hampered by lower prices for used barrels, and a decline in bulk whiskey sales. The company is now expecting low-single-digit underlying net sales growth and either flat underlying operating income or a modest decline for its full fiscal year ending in April.—Shane EnglishSubscribe to Shanken News Daily’s Email Newsletter, delivered to your inbox each morning.