Brown-Forman Q1 Earnings Report

(Reuters) – Brown-Forman missed first-quarter profit and sales estimates on Thursday, affected by higher input costs and weaker demand for its expensive whiskey and spirits.

The company’s whiskey business, which includes Jack Daniel’s Tennessee Whiskey, posted a 5% decline in sales for the quarter ended July 31 as consumers struggling with rising living costs reduced spending on high-margin products.

Liquor producers like Brown-Forman and Constellation Brands (NYSE:STZ) are grappling with sales growth for their premium brands, as more consumers are opting for affordable alternatives.

Additionally, high costs of raw materials such as agave, a crucial ingredient for tequila, and wood barrels have overshadowed the positive impacts of consecutive price increases and reduced costs of supply chain disruptions.

The company’s quarterly gross margin decreased by 330 basis points to 59.4%.

Brown-Forman’s first-quarter net income was $195 million, or 41 cents per share, down from $231 million, or 48 cents, a year earlier. Analysts had expected the company to earn 46 cents, according to LSEG data.

The company reported net sales of $951 million, missing the Wall Street estimate of $997.2 million.

Brown-Forman has maintained its forecast for fiscal year 2025, expecting a challenging operating environment due to macroeconomic and geopolitical uncertainties.