US drinks company Brown-Forman Corporation’s travel retail net sales for the first quarter ended 31 July declined -1% year-on-year on both a reported and organic basis.
The Jack Daniel’s to Herradura brand owner said the channel was impacted by the Middle East geopolitical headwinds.
The decline was primarily driven by lower volumes of Gin Mare, partially offset by the launch of Jack Daniel’s Tennessee Blackberry, the company observed.
Groupwide net sales also decreased -1% to US$911 million on a reported and organic basis. compared to the same prior-year period. Reported operating income decreased -3% to US$252 million (+4% organic) and diluted earnings per share increased +6% to US$0.38.
“Our first-quarter results were largely in line with our expectations and reinforce our confidence in the year ahead,” said President and Chief Executive Officer Lawson Whiting.
“Innovation remains an important growth driver. Momentum from New Mix, our Ready-to-Drink portfolio, and Jack Daniel’s Tennessee Blackberry helped offset pressures elsewhere in the business and demonstrates our ability to create new opportunities for growth even in a challenging operating environment.”
Net sales for whiskey products were flat as the continued international launch of Jack Daniel’s Tennessee Blackberry was offset by declines of Jack Daniel’s Tennessee Honey and Gentleman Jack, while Jack Daniel’s Tennessee Whiskey was flat.
Net sales for the tequila portfolio slumped -12% (-13% organic). Herradura’s net sales declined -17% (-18% organic) driven by lower volumes in the US and lower net pricing in Mexico. Meanwhile el Jimador’s net sales fell -10% (-11% organic), impacted by lower net pricing in the US.
Gross profit decreased -1% (+1% organic).
Looking forward the company said, “We anticipate the operating environment for fiscal 2027 to remain challenging, as macroeconomic pressures and geopolitical instability continue to negatively impact consumer behaviour and beverage alcohol consumption, particularly within developed markets.
“We remain committed to building our business for the long term while focusing intensely on the variables within our control. We believe we will benefit in fiscal 2027 from our previously announced restructuring initiative and US distributor changes, and continued new product innovation, such as the expansion of Jack Daniel’s Tennessee Blackberry.”
Considering those factors, Brown-Forman expects the following in fiscal 2027.
- Organic net sales to be approximately flat.
- Organic operating income to decline in the -3-5% range. ✈
