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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.

Jack Daniel’s has experienced positive net sales during the first nine months of Brown-Forman’s 2016 fiscal year

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.

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