Brown-Forman revises 2016 financial forecast

Jack Daniel’s owner Brown-Forman has lowered growth forecasts for its 2016 financial year after sales for the first nine months declined.

Net sales so far in the company’s 2016 fiscal have decreased -2% compared to the same period the previous year.

Brown-Forman’s net sales for the third quarter declined -1% to US$1.083 billion but an operating income increase of 2% to US$278m.

Underlying sales for the first nine months were up 5%, but year-to-date sales growth was adversely affected by eight percentage points due to foreign exchange rates.

“Against a backdrop of deteriorating economic conditions in emerging markets, weakness in the global travel retail channel, and headwinds from a strengthening dollar, we had another solid quarter of underlying growth, led by the Jack Daniel’s family and our American whiskey brands,” said Paul Varga, Brown-Forman chief executive officer.

“The organic growth of Jack Daniel’s and our premium brand portfolio against a diversified geographic opportunity, an ever-improving portfolio positioned for sustained growth, our efficient use of capital and the consistent return of capital to shareholders remain key ingredients in Brown-Forman’s value position.”

Year-to-date, Jack Daniel’s witnessed underlying net sales grow 7%, while its Tennessee Honey expression specifically saw underlying net sales grow 11% driven by “strong gains” in markets outside of the US.

Meanwhile, the group’s super- and ultra-premium whiskey brands recorded double-digit growth, boosted by 29% underlying sales growth from Woodford Reserve.

Tequila brand Herradura saw underlying net sales rise 12% thanks to souble-digit growth in the US and Mexico, while El Jimador jumped 4% due to positive performances in both the on- and off-trade in Mexico and New Mix RTDs leapt 25%, attributed to “benefit from distribution gains and new sizes”.

On Tuesday, Brown-Forman announced the completion of the sale of Southern Comfort and Tuaca to Sazerac for US$542.4m.