Brown-Forman Corporation (BF.B Quick QuoteBF.B - Free Report) has reported weak fourth-quarter fiscal 2025 results, wherein the bottom and top lines missed the Zacks Consensus Estimate and declined year over year. Quarterly results were hurt by a tepid macroeconomic landscape, including softening consumer demand. Moving ahead, management still expects the persistent headwinds. Weak sales for the tequila portfolio and sluggishness across the Travel Retail channel acted as deterrents.

Brown-Forman’s shares fell nearly 18% on disappointing fourth-quarter fiscal 2025 results and a dull outlook for fiscal 2026. This Zacks Rank #3 (Hold) company’s shares have lost 23.4% in the past three months against the industry’s 1.7% growth.

In the fiscal fourth quarter, earnings per share (EPS) of 31 cents plunged 45% year over year and lagged the Zacks Consensus Estimate of 36 cents. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

Net sales of $894 million dipped 7% on a reported basis and came below the Zacks Consensus Estimate of $973 million. On an organic basis, net sales slipped 3% from the prior-year period.

Brown-Forman’s Margins & Expenses

In the fiscal fourth quarter, Brown-Forman’s gross profit of $513 million declined 10% year over year on a reported basis and 5% on an organic basis. Also, the gross margin contracted 170 basis points to 57.3%.

Selling, general and administrative (SG&A) expenses of $193 million declined 16% year over year on a reported basis and 6% on an organic basis.

Operating income decreased 45% year over year to $205 million on a reported basis. The organic operating income dipped 2%. The operating margin of 22.9% fell sharply from 38.9% reported in the year-ago quarter.

Understanding Brown-Forman’s Market Performance

In fiscal 2025, the company’s net sales declined 5% on a reported basis but were up 1% on an organic basis.

Net sales in the United States decreased 7% year over year on a reported basis and 2% on an organic basis in the fiscal year, due to the Sonoma-Cutrer divestiture, weak volumes of Korbel California Champagnes and Jack Daniel’s Tennessee Whiskey and the adverse impacts of JDCC. Higher estimated distributor inventories contributed to net sales. However, this softness was partly offset by growth in Woodford Reserve as the brand outpaced the U.S. Whiskey category. 

In developed international markets, net sales dipped 6% year over year and 3% on an organic basis due to lower volumes in Italy, South Korea and the United Kingdom, and the absence of the Finlandia brand. This was somewhat offset by increased volumes of Jack Daniel’s Tennessee Whiskey in Japan.

Net sales in the emerging markets dropped 2% on a reported basis but grew 9% on an organic basis, mainly due to adverse currency fluctuations, the Finlandia divestiture and reduced sales in the Tequila portfolio in Mexico. However, the growth of Jack Daniel’s family of brands in Türkiye, the United Arab Emirates and Brazil, along with robust volumes of New Mix, partially offset the decline.

The Travel Retail channel saw a net sales drop of 7% on a reported basis and 5% on an organic basis due to reduced volumes for other super-premium Jack Daniel’s expressions and the Finlandia divestiture. This decline was somewhat negated by the increased volumes of Diplomático.

A Peek at BF.B’s Brands’ Performance

During fiscal 2025, net sales for Whiskey products were flat year over year but rose 1% on an organic basis. Growth from Woodford Reserve and Jack Daniel’s Tennessee Whiskey was negated by the adverse impacts of foreign exchange and weak other super-premium Jack Daniel’s expressions. These expressions comprise Jack Daniel’s Single Barrel and several other Jack Daniel’s special releases, which fell year over year, partly due to several product launches. An expected net increase in distributor inventories contributed to net sales.

Net sales for the tequila portfolio slumped 14% year over year on a reported basis and 12% on an organic basis, due to the adverse impacts of foreign exchange, competitive landscape in the United States and tough macroeconomic conditions in Mexico. el Jimador’s net sales declined 13% on a reported basis and 11% on an organic basis due to by lower volumes. Herradura brand’s sales dropped 13% on a reported basis and 10% on an organic basis on lower volumes and increased promotional pricing.

The company witnessed a year-over-year sales drop of 6% on a reported basis but growth of 5% on an organic basis for the Ready-to-Drink (RTD) category. Sales for New Mix were down 1% on a reported basis but improved 13% on an organic basis as double-digit volumes were more than offset by the adverse foreign exchange. Jack Daniel’s RTD/Ready-to-Pours portfolio reported a sales drop of 8% on a reported basis and a sales improvement of 1% on an organic basis, mainly led by the Jack Daniel’s Country Cocktails business model change (JDCC).

The company’s rest of the portfolio sales plunged 33% year over year and 2% on an organic basis, due to the Finlandia and Sonoma-Cutrer divestitures and reduced volumes of Korbel California Champagnes in the United States. This was somewhat offset by gains from Diplomático and Gin Mare.

BF.B’s Financial Health Snapshot

The company ended fourth-quarter fiscal 2025 with cash and cash equivalents of $444 million and long-term debt of $2.4 billion. Its total shareholders’ equity was almost $4 billion. As of April 30, 2025, BF.B had $598 million in cash from operating activities.

What to Expect From Brown-Forman in Fiscal 2026?

For fiscal 2026, management projects the operating landscape to remain challenging with low visibility, due to macroeconomic and geopolitical volatility. BF.B has been witnessing headwinds from consumer uncertainty, the potential impacts of presently unknown tariffs and reduced non-branded sales of used barrels. 

Nevertheless, the company is focused on building the business in the long term and navigating the tough environment via its strategic initiatives. It expects growth, backed by the significant evolution of its U.S. distribution, the restructuring efforts and robust product innovations. 

For fiscal 2026, Brown-Forman now projects an organic net sales decrease in the low-single-digit range. Organic operating income is likely to decline in the low-single-digit range. The effective tax rate is expected to be in the band of 21-23% and capital expenditures are anticipated to be $125-$135 million.

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The Zacks Consensus Estimate for UTZ’s current financial-year sales and EPS implies growth of 1.4% and 10.4%, respectively, from the year-ago numbers.