Brown-Forman Maintains Full-Year Guidance as First-Quarter Sales Miss Views
Brown-Forman (BF.A, BF.B) reiterated its guidance for fiscal 2027 organic sales on Wednesday as it flagged continuing consumer headwinds that drove weaker-than-expected first-quarter top-line.For the ongoing fiscal year, the parent of Jack Daniel's whiskey continues to expect roughly flat organic sales. Analysts in a FactSet poll are looking for full-year reported sales of $3.95 billion, compared with $3.93 billion in fiscal 2026.Brown-Forman continues to project a 3% to 5% decline in organic operating income for the current fiscal year.For the quarter ended July 31, revenue slipped 1% to $911 million, below Wall Street's $914.8 million view for the class B listing. Earnings per share rose to $0.38 from $0.36."We anticipate the operating environment for fiscal 2027 to remain challenging, as macroeconomic pressures and geopolitical instability continue to negatively impact consumer behavior and beverage alcohol consumption, particularly within developed markets," the company said in its earnings release.Analysts at RBC Capital Markets had seen a challenging first-quarter setup for the wine and spirits maker given a tough comparison and cautious consumer sentiment. In a note e-mailed Tuesday, RBC analysts pointed to severe US spirits headwinds reported by Brown-Forman's competitors, Diageo (DEO) and Pernod Ricard.Beer maker Molson Coors Beverage (TAP) last month reported a 3.3% annual drop in second-quarter net sales as heightened global macroeconomic headwinds weighed on consumer behavior. Earlier this year, Constellation Brands, the maker of Modelo and Corona, posted stronger-than-expected fiscal first-quarter results despite what its chief executive described as "a discerning and value-conscious consumer environment."In the US, consumer sentiment dropped in August amid concerns that inflation will continue to be high for the "foreseeable future," University of Michigan said Friday. Inflation concerns appear to be intensifying as renewed US-Iran hostilities have driven oil prices higher.Brown-Forman said its first-quarter net sales in the US dropped 3% year on year, driven by the end of the Korbel relationship, lower distributor inventories and volume declines for Jack Daniel's Tennessee Blackberry. Sales fell 6% in developed international markets and grew 11% in emerging markets.Sales of whiskey products were flat and tequila revenue plunged 12%, countering 20% sales growth in the ready-to-drink segment.Brown-Forman's class A and B shares rose 2.7% and 3.2%, respectively, in Wednesday trade. They are up 5.4% and 4.3% so far this year.
