Jack Daniel's maker Brown-Forman missed quarterly profit expectations, hurt by higher input costs and sluggish demand for its pricier whiskeys like Woodford Reserve and Gentleman Jack in the US.
Shares of the company were down about 4% in premarket trade as its net sales in the first quarter also fell marginally short of analysts' expectations.
Higher input costs, including for agave, grains and wood, took a toll on the spirits maker, even as shipment volumes declined in the United States after wholesalers worked to trim inventories.
Excluding items, the Jack Daniel's parent earned 48 cents per share, compared with a profit estimate of 53 cents per share, as per Refinitiv data.
Advertising expenses in the quarter rose 19%, while overall expenses were up 14% as it also battled a tough labour market.
The company has increased the prices of its spirits between 2% and 3% year-on-year, in a bid to ease the damage to its margins as a fallout of supply-chain and input-cost issues that peaked in the last fiscal.
Gross margin for the quarter ended 31 July was 62.7%, up from 61.8% a year ago, as the company benefited from a let-up in supply-chain snags.
Distributor inventories – or the stock that wholesalers hold – declined 11% in the US in the reported quarter, contributing to an 8% fall in the company's net sales in the country.
Its quarterly net sales rose 3%, to $1.04 billion, compared with analysts' average estimate of $1.05 billion.
Still, Brown-Forman reaffirmed its annual target of organic net sales growth between 5% to 7%.
Lawson Whiting, Brown‑Forman’s president and chief executive officer stated, “As anticipated, our first quarter growth was impacted by the difficult shipment comparison from fiscal 2023, when we rebuilt inventory impacted by prior glass supply challenges. [...]”
Article by Reuters, additional reporting by ESM