Jack Daniel's maker misses profit estimate as costs pinch amid tepid demand
JACK Daniel’s maker Brown-Forman missed quarterly profit expectations on Wednesday (Aug 30), 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 per cent in pre-market 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, Brown-Forman earned 48 US cents per share, compared with a profit estimate of 53 cents per share, as per Refinitiv data.
Advertising expenses in the quarter rose 19 per cent, while overall expenses were up 14 per cent as it also battled a tough labour market.
The company has increased the prices of its spirits between 2 per cent and 3 per cent 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.
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Gross margin for the quarter ended Jul 31 was 62.7 per cent, up from 61.8 per cent a year ago, as the company benefited from a let-up in supply-chain snags.
Distributor inventories – the stock that wholesalers hold – declined 11 per cent in the US in the reported quarter, contributing to an 8 per cent fall in the company’s net sales in the country.
Its quarterly net sales rose 3 per cent, to US$1.04 billion, compared with analysts’ average estimate of US$1.05 billion.
Still, Brown-Forman reaffirmed its annual target of organic net sales growth between 5 per cent to 7 per cent. REUTERS
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