- Jack Daniel’s producer, Brown-Forman, had a rare results miss compared to Q1 fiscal 2024 expectations, citing sluggish whiskey sales, supply challenges, and inventory rebuilding.
Marketing and operating costs also soared during the quarter, outpacing revenue growth and weighing on profits. - Revenue rose 3% year-over-year to $1.04 bn. Whiskey product net sales fell 1%, with Woodford Reserve and Gentleman Jack leading the decline.
- Jack Daniel’s Tennessee Whiskey sales remained flat due to reduced distributor inventories in the US.
- Net sales in the US declined 8% due to volume decreases. Growth was observed in ready-to-drink (RTD) and tequila categories, with New Mix RTD net sales surging by 52% and el Jimador tequila net sales growing 27%.
- The company’s recent acquisition of the Gin Mare and Diplomático brands were also a bright spot.
- Overall growth was driven by strong international sales, which were up 11%.
- Brown-Forman’s gross margin was largely in line with expectations, coming in at 62.7%.
- Despite the weak quarter, Brown-Forman said it is on track to achieve its goal of growing organic net sales by 5 to 7%, and organic operating income by 6 to 8% in fiscal 2024. Brown Forman is a member of the prestigious S&P 500 Dividend Aristocrats index, and has paid regular quarterly cash dividends for 79 years, having increased them consecutively for the last 39 of them. This high-quality stock remains pricey on 41x earnings, but is certainly one to keep on your radar.
By Lee Kern