Brown-Forman Corporation today reported financial results for the second quarter and first half of its fiscal year ended 31 October, noting that net sales growth in the half was slower than expected at +2% year-on-year, reaching US$2.1 billion.
Travel retail outperformed the general trend with net reported sales climbing +3% in the half.
The company said it was cutting its sales target for the full year amid a softening of the business in key markets. It has now lowered its projections for net sales growth to +3% to +5% for the year, compared to +5% to +7% previously.
Commenting on the travel retail division’s performance, the company said: “The travel retail channel sustained growth, on exceptionally high comparisons in the same prior-year period, with reported net sales increasing +3% (flat organic) led primarily by the super-premium American whiskey portfolio reflecting growth from Woodford Reserve, the launch of Jack Daniel’s American Single Malt, Jack Daniel’s Single Barrel, and the acquisitions of Gin Mare and Diplomático.
“This growth was partially offset by lower volumes of Jack Daniel’s Tennessee Whiskey and Jack Daniel’s Tennessee Honey.”
First-half reported operating income at group level increased +1% to US$666 million (+1% on an organic basis).
Q2 reported net sales overall increased +1% to US$1.1 billion (-1% on an organic basis) compared to the same prior-year period. In the quarter, reported operating income increased +8% to US$339 million (+9% on an organic basis).
Brown-Forman President and Chief Executive Officer Lawson Whiting said: “Our first-half fiscal 2024 results illustrate Brown-Forman’s ability to deliver continued growth, even amid dynamic market conditions and very strong comparisons from the prior-year period.
“While we grew at a slower pace than anticipated, we delivered strong gross margin expansion and continued to invest strongly behind our brands. We continue to believe our premium portfolio and broad geographic footprint will position us for accelerated growth in the second half of the fiscal year.”
Alongside travel retail, Emerging and Developing International market divisions drove net sales growth, which was partially offset by declines in the US.
Brand highlights included:
- The recently acquired Gin Mare and Diplomático brands collectively increased the company’s reported net sales by +2%
- New Mix RTD delivered strong reported net sales growth of +41% (+22% organic), and
- Jack Daniel’s Tennessee Apple delivered double-digit reported net sales growth of +51% (+52% organic).
- Reported net sales growth was partially offset by Jack Daniel’s Tennessee Whiskey’s reported net sales decline of -4% (-2% organic).
Compared to strong results in the same period last year, reported net sales for whiskey products declined -2% (-1% organic).
The Jack Daniel’s Family of Brands reported a net sales decline of -1% (flat on an organic basis) driven by lower volumes for Jack Daniel’s Tennessee Whiskey, Jack Daniel’s Tennessee Honey, and Gentleman Jack partially offset by the growth of Jack Daniel’s Tennessee Apple and Jack Daniel’s super-premium expressions led by Jack Daniel’s Sinatra, Jack Daniel’s Bonded Rye, and Jack Daniel’s Single Barrel.
With a high comparison in the same prior-year period, Woodford Reserve’s reported net sales declined -3% (-3% organic) and Old Forester’s reported a net sales decline of -5% (-5% organic).
Reported net sales for the tequila portfolio grew +2% (-1% organic). el Jimador delivered reported net sales growth of +8% (+7% organic) driven by higher prices, particularly in the US, and higher volumes in Colombia partially offset by lower volumes in the US and Mexico. Herradura’s reported net sales declined -5% (-9% organic) driven by lower volumes in the US, partially offset by growth in Mexico.
Gin Mare and Diplomático drove the significant increase in Rest of Portfolio’s reported net sales growth of +104% (+17% organic).
Addressing the outlook for the rest of fiscal 2024, the company noted that “evolving global macroeconomic conditions continue to create a challenging operating environment tempering our expectations”. ✈
