Brown-Forman (B-FB) down 3% on missed earnings
By Robert Davis
17:30, 8 December 2021
The stock of Brown-Forman Corporation dropped Wednesday after the US wine and spirits maker reported fiscal second quarter financial results that missed Wall Street’s estimates.
Both the Class A and B shares were down about 2.8%, with BF-A trading at $65.62 per share and BF-B at $70.42 in early afternoon US trading. Class A shares are thinly traded and are predominantly owned by the Brown family. Class B are non-voting shares.
Including Wednesday’s dip, BF-B has lost 11% of its value over the last year.
Earnings details
According to the Louisville, Kentucky-based company’s earnings report, Brown-Forman recorded net sales of $994m (£882m) in the three months ended 31 October, an increase of just 1% on an annualised basis.
The distiller of Jack Daniels whisky also reported earnings per share (EPS) of $0.49, a 2% increase from a year ago.
For comparison, 14 analysts surveyed by Yahoo Finance estimated the company would report net sales of $1.05bn and EPS of $0.53.
Lawson Whiting, Brown‑Forman’s chief executive, said the “many challenges and ongoing uncertainties created by the pandemic” influenced the company’s performance in Q2.
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First half highlights
The earnings report also included results from Brown-Forman’s first half of fiscal 2022.
First half net sales grew by 9% to $1.9bn as the company continued to focus on developing international, emerging markets, and travel retail channels.
Meanwhile, the company’s tequila portfolio—which includes brands such as Herradura and el Jimador—outpaced the growth of its other product categories.
Brown-Forman’s tequila sales increased by 16% when compared to last year while its bourbon collection grew by 11% and its Jack Daniel’s brand grew by 9%.
Herradura saw strong growth across the US and Mexico while el Jimador saw its sales grow in the UK and Latin America, the company said.
Outlook
Looking ahead to the third fiscal quarter, the company said it “remains confident” in its ability to continue this growth.
Brown-Forman also raised its guidance from “mid-single digit to high-single digit growth” for the full-year.
The company also expects its gross margin to be flat when compared to fiscal year 2021 as “higher input costs related to commodity prices” and supply chain disruptions continue to create “unfavourable” market conditions.
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