Brown-Forman beats Q1 estimates but shares drop 4%
Brown-Forman posted first-quarter sales that topped Wall Street expectations, but its shares still slid more than 4%. The spirits maker flagged ongoing tariff risks and weak consumer sentiment in the US and Europe, despite growth in emerging markets.
Jack Daniel’s owner Brown-Forman beat Wall Street estimates for its sales in the first quarter to the end of July, but its shares fell by more than 4% on the news despite the company reiterating its formal guidance for the full year.
Organic sales in its US home market were 2% lower in the quarter, compared with a 4% drop reported 12 months ago.
Overall, organic sales were up by 1%, compared with a 4% fall in the comparable quarter in 2024.
Although net sales fell by 3% to US$924 million, they beat analysts’ estimates of $909.2 million. Earnings per share were 36 cents, in line with expectations.
Brown-Forman’s president and CEO, Lawson Whiting, called the performance a “solid first-quarter” — especially when factoring in the “challenging environment.”
“Overall, I’m pleased with the start to our year,” Whiting said.
Emerging markets offset US weakness
While US sales fell, demand in emerging markets for Brown-Forman’s premium-priced whiskies such as Jack Daniel’s, Old Forester and Woodford Reserve helped offset the home market problems.
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Some of the US shipment figures were skewed by Brown-Forman radically changing its US distribution arrangements. They will unravel over the next two quarters.
Tariff threats continue to loom over Brown-Forman’s exports. President Donald Trump’s plans to double tariffs on steel and aluminium imports to 50% could risk margins of its ready-to-drink products, while the European Union has yet to respond to his 50% duties on European wines and spirits.
Severe Canadian impact
The company remained severely affected by its products not being on Canadian shelves as the tariff row with the White House continues. Organic net sales there fell by almost 60% in the quarter.
While Canadian government officials recently said they would remove retaliatory tariffs from some products, including US alcohol, several provinces continue to ban American products from their shelves.
“We remain optimistic based on recent developments related to tariffs under the United States-Mexico-Canada Agreement,” Whiting said.
Against that backdrop, the company underlined that its new fiscal year will continue to be challenging, “with low visibility due to macroeconomic and geopolitical volatility” and that it would face “headwinds from consumer uncertainty and the potential impact from currently unknown tariffs”.
Europe hit by slowdown and tariffs
Whiting said that in Europe, “consumer sentiment and confidence remain pressured.” In the UK, organic net sales fell by 16% while those in Germany fell by 13% in the quarter.
Whiting said the European slowdown was because “economic conditions remain challenging for consumers and tariff uncertainty caused disruptions in ordering patterns from retailers, which negatively impacted the year-over-year trends.”
Whiting said Jack Daniel’s Tennessee Whiskey saw growth in value share in some markets, especially with the successful launch of the new blackberry product. Super-premium brands like Gentleman Jack and Diplomatico saw double-digit growth, and El Jimador Tequila continued to gain ground globally.
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