Brown-Forman (BF.A, Financial) reported a decline in its fourth-quarter revenue, coming in at $894 million, down from $964 million in the same period last year. Despite facing a dip in consumer demand, the company showcased its capability to achieve organic growth, reflecting the robustness and adaptability of its team. Although the results did not align with their long-term growth targets, the company marked significant progress amidst a challenging economic climate.
Looking forward to fiscal 2026, Brown-Forman anticipates ongoing challenges but remains optimistic. The company emphasizes its commitment to agility, innovation, and strategic execution, which they believe position them well for navigating uncertainties and seizing new opportunities for sustainable growth.
BF.A Key Business Developments
Release Date: March 05, 2025
- Reported Net Sales: Decreased 4% in the nine months of fiscal 2025.
- Organic Net Sales: Grew 2% after adjusting for divestitures and other factors.
- Woodford Reserve Organic Net Sales Growth: Increased 10%, driven by higher volumes and positive price mix.
- Jack Daniel's Tennessee Whiskey Organic Net Sales Growth: Increased 2% for the year-to-date period.
- New Mix Organic Net Sales Growth: Achieved double-digit growth in 12 of the past 13 quarters.
- Diplomatico Organic Net Sales Growth: Delivered strong double-digit growth, led by France and Czechia.
- Gin Mare Organic Net Sales Growth: Increased double digits, driven by Germany, Spain, and travel retail.
- Gross Margin: Contracted by 150 basis points to 59.4%.
- Operating Expenses: Lower due to a 6% decrease in organic advertising expense and a 4% decrease in organic SG&A investment.
- Reported Operating Income: Decreased 13% in the nine months of fiscal 2025.
- Organic Operating Income Growth: Increased 5% in the nine months of fiscal 2025.
- Diluted Earnings Per Share: Decreased 4% to $1.53.
- Expected Annualized Savings from Workforce Reduction and Cooperage Closure: Approximately $70 million to $80 million.
- Proceeds from Cooperage Asset Sale: Expected to be more than $30 million.
- Cash Received from Duckhorn Portfolio Sale: $350 million, with a $78 million gain recognized.
- Capital Expenditures Outlook: Estimated to be in the range of $180 million to $190 million.
- Effective Tax Rate Outlook: Updated to approximately 20% to 22%.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Brown-Forman Corp (BF.A, Financial) reported sequentially stronger top and bottom-line results as they entered the second half of fiscal 2025.
- Organic net sales grew 2% after adjusting for divestitures, with Woodford Reserve and Jack Daniel's Tennessee Whiskey being major contributors.
- The company reaffirmed its full-year organic net sales and organic operating income outlook for fiscal 2025.
- Emerging international markets delivered an 8% organic net sales increase, led by strong growth in Turkey and Brazil.
- Brown-Forman Corp (BF.A) is executing strategic initiatives, including restructuring and workforce reduction, expected to deliver $70 million to $80 million in annualized savings.
Negative Points
- Reported net sales decreased by 4% in the nine months of fiscal 2025.
- The operating environment remains dynamic with uncertainties, particularly concerning tariffs.
- Tequila brands, Jimador and Herradura, continue to face challenges in the US and Mexico.
- Higher costs and the negative impact of foreign exchange led to a 150 basis points gross margin contraction.
- The US spirits market is experiencing flat to declining trends, with consumer spending being more mindful due to inflationary pressures.
