Brown-Forman Corp. Reports Unexpected Decline in Q1 Profit

Shares of Brown-Forman Corp. (BF.B) plunged 4.4% to a seven-week low in premarket trading on Wednesday following the release of their fiscal first-quarter results. Despite maintaining its full-year outlook, the spirits company, known for its Jack Daniel's brand whiskey, reported a surprising decline in profit and slightly missed sales expectations.

Impact of Prior Glass Supply Challenges

Chief Executive Lawson Whiting acknowledged the impact of a challenging shipment comparison from fiscal 2023, a period when inventory was rebuilt due to prior glass supply challenges. This factor contributed to the company's lower-than-expected financial performance.

Financial Highlights

In the quarter ending July 31, net income dropped to $231 million, or 48 cents per share, compared to $249 million, or 52 cents per share, in the same period last year. Analysts had projected earnings per share to rise to 53 cents, according to FactSet consensus data.

Although sales experienced a modest growth of 3.1% to reach $1.038 billion, it fell short of the FactSet consensus estimate of $1.053 billion. Whiskey sales declined by 1%, while tequila sales saw a notable increase of 15%. The ready-to-drink category also displayed positive growth with New Mix sales surging by an impressive 52%.

Outlook for Fiscal Year 2024

Despite the disappointing start to the fiscal year, Brown-Forman Corp. remains optimistic about its future prospects. The company reiterated its expectation for organic net sales growth within the range of 5% to 7% for fiscal year 2024.

Stock Performance

Over the past three months, Brown-Forman Corp.'s stock has rallied by 12.2%, outperforming the S&P 500 index, which posted a gain of 7.0% over the same period.