Brown-Forman reports 5% decline in H1 net sales amid challenging economic conditions

USA – Brown-Forman Corporation has released its first-half financial results for the period ending October 31, 2024, reporting a 5 percent year-on-year decline in net sales to US$2 billion, with organic sales remaining flat.  

Operating income fell 7 percent to US$622 million (-3% on an organic basis), while diluted earnings per share decreased by 3 percent to US$0.96. 

Gross profit also recorded an 8 percent decline attributed to the divestiture of Finlandia vodka and Sonoma-Cutrer wines. The impact of these sales was reflected across multiple segments of the company’s operations. 

In the travel retail channel, net sales dropped by 5% percent(-3% organic), primarily due to lower volumes of super-premium Jack Daniel’s expressions and Woodford Reserve. The sale of Finlandia vodka further contributed to the decline. However, this was partially offset by growth in Jack Daniel’s Tennessee Whiskey and Diplomático rum. 

The United States market experienced a 7 percebt drop in net sales, driven by reduced volumes for Jack Daniel’s Tennessee Whiskey and Korbel California Champagnes, compounded by the divestiture of Sonoma-Cutrer and the impact of Jack Daniel’s Country Cocktails. 

Other regions also saw year-on-year declines, including Developed International Markets (-5%) and Emerging Markets (-3%), reflecting weaker consumer spending amid global economic challenges. 

Brown-Forman’s product categories showed mixed results. Whiskey net sales declined 1 percent, while tequila sales fell sharply by 17 percent, with ready-to-drink products declining 6 percent and other tequila brands dropping 26 percent. Growth in Diplomático rum partially offset these declines. 

Despite the headwinds, Lawson Whiting, President and CEO of Brown-Forman, expressed optimism about the company’s long-term outlook.  

“Despite challenging economic conditions, our results for the first half of the fiscal year were in line with our expectations, and we anticipate a return to growth in fiscal 2025,” he said. 

For the full fiscal year, Brown-Forman expects organic net sales growth of 2% to 4% and similar growth in organic operating income.  

The company anticipates gains in international markets and benefits from normalised inventory trends but acknowledges ongoing macroeconomic and geopolitical uncertainties that could impact operations. 

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