Brown-Forman missed first-quarter profit and sales estimates, hurt by higher input costs and weaker demand for its pricey whiskey and spirits.
The company's whiskey business, which includes Jack Daniel's Tennessee Whiskey, posted a 5% fall in sales for the quarter ended 31 July as consumers wrestling with rising cut back spending on its higher-margin products.
Liquor makers such as Brown-Forman and Constellation Brands have been struggling to boost sales for their premium brands with consumers increasingly switching to affordable alternatives.
Meanwhile, high expenses of raw materials such as agave, a key ingredient for tequila, and wood barrels overshadowed the benefits from consecutive price hikes and easing costs of supply chain disruptions.
The company's quarterly gross margin fell 330 basis points to 59.4%.
First-Quarter Highlights
Brown-Forman posted a first-quarter net income of $195 million (€176.3 million), or 41 cents per share, compared with $231 million (€208.8 million), or 48 cents, from a year earlier.
Analysts on average expected the company to earn 46 cents, according to LSEG data.
The company posted net sales of $951 million (€859.6 million), missing the Wall Street estimate of $997.2 million (€901.4 million).
Brown-Forman maintained its forecast for fiscal year 2025, anticipating a challenging operating environment due to macroeconomic and geopolitical uncertainties.
Lawson Whiting, president and chief executive officer of Brown-Forman, stated, “Our first quarter results were in line with our expectations and, as such, we are pleased to reaffirm our full-year fiscal 2025 guidance, including organic top and bottom line growth and continued reported gross margin expansion.
“We believe we have the right strategy, brands, and geographic breadth in place to effectively manage through the challenging consumer and cost environment, and are inspired every day by the talent, resilience, and creativity of our people.”
News by Reuters, additional reporting by ESM.
