Rosalind Evans
Brown-Forman, known for Jack Daniel’s, missed Wall Street’s first-quarter fiscal 2024 forecasts on Wednesday, grappling with diminished whiskey sales, supply issues, and a substantial inventory re-establishment.
The company noted a 1% reduction in whiskey net sales, with Woodford Reserve and Gentleman Jack leading this decline. Jack Daniel’s Tennessee Whiskey, however, held steady, attributed to decreased distributor stock throughout the U.S.
CEO Lawson Whiting of the Kentucky-based spirits firm commented, “Our Q1 growth was understandably affected, compared against fiscal 2023’s difficult shipment rates due to the aftermath of past glass supply problems.”
U.S. market net sales dropped by 8% due to declining volumes. On the bright side, the company recorded advancements in its RTD (ready-to-drink) and tequila segments.
Specifically, the New Mix RTD range observed a robust net sales surge of 52%. Similarly, the el Jimador tequila brand witnessed a 27% sales increase. Furthermore, the recent additions of Gin Mare and Diplomático to the company’s portfolio have shown promise.
Whiting expressed continued confidence, stating, “Our faith in our team, our product line, and our operations remains undeterred, and we stand by our 5-7% organic net sales growth and 6-8% organic operating income growth projections for the full fiscal 2024 year.”
For the quarter, the company’s total revenue rose by 3% compared to the previous year, and they are holding firm on their annual projections.
Here’s a breakdown of Brown-Forman’s performance in the quarter ending July 31 against analyst expectations from Refinitiv:
– Earnings per share: Achieved 48 cents, missing the anticipated 53 cents.
– Revenue: Reached $1.04 billion, slightly below the predicted $1.05 billion.
– Net income: For this period was $231 million or 48 cents/share, a 7% drop from the prior year, when they registered $249 million or 52 cents/share.
Despite the revenue growth, rising marketing and operational expenses overshadowed profits during the quarter. Advertising expenditure particularly swelled by 19%, fueled by the debut of the Jack Daniel’s & Coca-Cola RTD product, increased focus on Jack Daniel’s Tennessee Whiskey, and recent brand acquisitions.
In the dynamic landscape of the beverage industry, Brown-Forman’s resilience in the face of challenges is noteworthy. While the dip in whiskey sales and the unexpected expenses may cause concern, the robust performance in other sectors, such as RTD and tequila, suggests adaptability and potential for future growth. As the fiscal year continues, stakeholders and aficionados alike will be keenly watching the company’s moves, hoping for a rebound in the whiskey sector and continued innovation across its diverse product portfolio.
