Brown-Forman Shares Drop in 2025 Amid Rising Costs and Declining Premium Whiskey Demand
Brown-Forman, the renowned producer of Jack Daniel’s whiskey, experiences a decline in shares due to increased production costs and reduced demand for its premium spirits. Despite challenges, the company maintains its full-year growth forecast.
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Highlights
- Brown-Forman’s Q1 2024 earnings fell short of expectations amid rising costs and weakening demand for premium whiskey.
- While whiskey sales dipped, other segments of the company’s portfolio showed positive growth.
- The company reaffirmed its full-year revenue and operating income growth targets.
Shares of Brown-Forman (BF.A), the maker behind iconic brands like Jack Daniel’s, declined over 5% in early trading on Wednesday after releasing disappointing quarterly results. Increased production expenses and a slowdown in demand for high-end products pressured the company’s financial performance.
For the first quarter of fiscal 2024, Brown-Forman reported earnings per share (EPS) of $0.48 and revenue of $1.04 billion, representing a 3% increase but falling short of analyst forecasts. Net income decreased by 7% year-over-year to $231 million.
The company faced higher costs for raw materials including agave, grains, and wood, leading to a 14% overall rise in expenses. Advertising spending surged by 19% as well.
Sales of whiskey products declined by 1%, mainly impacted by reduced distributor inventories of premium labels such as Woodford Reserve and Gentleman Jack. However, other product lines within Brown-Forman’s portfolio experienced gains.
CEO Lawson Whiting noted that growth was challenged by tough shipment comparisons to fiscal 2023, when inventory was rebuilt following previous supply chain disruptions related to glass shortages.
Despite these hurdles, Brown-Forman maintained its full-year guidance, anticipating sales growth between 5% and 7%, with operating income expected to rise 6% to 8%.
Since reaching a 2023 peak late last month, Brown-Forman’s stock has pulled back but remains positive for the year.
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