Key Takeaways:
- Brown-Forman, the parent company of Jack Daniel’s, experienced a significant drop in its share price following the release of its third-quarter fiscal 2024 financial results.
- The company reported a 1% decline in revenue compared to the same period last year, amounting to $1.07 billion, which fell short of analyst expectations.
- Brown-Forman cited ongoing challenges in the operating environment, characterizing it as “challenging,” and indicated a cautious outlook for the second consecutive quarter.
- The company’s downward revision of its guidance and the acknowledgment of the difficult conditions it faces contributed to investor concerns.
- As a result, Brown-Forman’s stock value experienced a notable decline as investors reacted negatively to the disappointing financial performance and cautious outlook.
Brown-Forman (BF.A), the company behind Jack Daniel’s, experienced a sharp decline in its stock price, making it the worst-performing stock in the S&P 500 on Wednesday. Shares plummeted over 7% in intraday trading following the release of the company’s third-quarter fiscal 2024 financial results. CEO Lawson Whiting attributed the challenges to “a year with significant uncertainty and complexity” within the industry.
In its third-quarter report, Brown-Forman disclosed a 1% decrease in revenue compared to the year-ago period, amounting to $1.07 billion, falling short of analyst expectations. However, the company reported a higher-than-expected profit of 60 cents per share.
For the first nine months of the fiscal year, Brown-Forman recorded a 1% increase in revenue, reaching $3.21 billion, with earnings per share (EPS) of $1.58. The growth was primarily driven by a substantial 79% surge in sales from its “Rest of Portfolio” unit, attributed to recent acquisitions of Gin Mare and Diplomatico brands. Additionally, sales of Jack Daniel’s Tennessee Apple rose by 44%. However, net sales of its flagship product, Jack Daniel’s Tennessee Whiskey, declined by 6%.
Amidst ongoing challenges in the operating environment, Brown-Forman warned of continued difficulties and adjusted its guidance for the year. It now anticipates flat organic net sales for the full year, citing slower-than-expected growth in the nine months leading up to January 31, 2024. Previously, the company had forecasted a 3% to 5% increase. Brown-Forman also revised its projection for organic operating income to be in the 0% to 2% range, down from the initial outlook of 4% to 6% growth. Furthermore, the company announced plans to reduce capital spending to $230 million to $240 million, down from the previously projected range of $250 million to $270 million.
As of 3:25 p.m. ET Wednesday, Brown-Forman’s shares were down 7.9% at $56.26. Over the past year, the stock has depreciated by more than 16% in value.