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Brown-Forman Q1 Earnings Miss Estimates, Sales Beat on Portfolio Gains
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Key Takeaways
Brown-Forman posted Q1 EPS of 36 cents, missing estimates, while sales of $924M topped the same.
The gross margin expanded to 59.8%, aided by acquisitions, despite FX headwinds and higher costs.
Management reaffirmed its FY26 outlook, citing resilience through innovation and distribution shifts.
Brown-Forman Corporation (BF.B - Free Report) has reported mixed first-quarter fiscal 2026 results, wherein the top line beat the Zacks Consensus Estimate, while the bottom line missed the same. Both sales and earnings declined year over year. The fiscal first-quarter results highlight the decisive actions the company has taken to strengthen its business amid a challenging environment. With superior innovation and bold route-to-consumer strategies, it has built resilience to navigate persistent headwinds while sustaining growth.
Reaffirming its fiscal 2026 outlook further reflects confidence in its strategy and brand portfolio. The company remains committed to driving consistent performance and delivering long-term value for shareholders.
Brown-Forman’s shares rose 4.6% following the first-quarter fiscal 2026 results and a retained outlook for fiscal 2026. This Zacks Rank #4 (Sell) company’s shares have lost 10.7% in the past three months compared with the industry’s 8% decline.
Image Source: Zacks Investment Research
In the fiscal first quarter, earnings per share (EPS) of 36 cents fell 13% year over year and lagged the Zacks Consensus Estimate of 37 cents.
Net sales of $924 million declined 3% on a reported basis but beat the Zacks Consensus Estimate of $911 million. On an organic basis, net sales rose 1% from the prior-year period. The decline in net sales was primarily due to the lapse of the prior-year transition services agreement (TSA) tied to Sonoma-Cutrer.
Brown-Forman Corporation Price, Consensus and EPS Surprise
In the fiscal first quarter, BF.B’s gross profit of $552 million declined 2% year over year on a reported and organic basis. However, the gross margin expanded 40 basis points (bps) to 59.8%, aided by acquisitions and divestitures. This gain was partly offset by higher costs, an unfavorable price/mix and adverse foreign exchange.
Selling, general and administrative (SG&A) expenses of $177 million declined 6% year over year on a reported basis and 7% on an organic basis. The decrease was primarily due to reduced compensation and benefit-related expenses.
Operating income decreased 7% year over year to $260 million on a reported basis. However, the organic operating income rose 2%. The operating margin of 28.2% contracted 140 bps from 29.6% reported in the year-ago quarter. The decline was mainly attributable to unfavorable foreign exchange, the absence of the prior-year franchise tax refund and restructuring impacts, partially offset by benefits from substitution drawback claims.
Understanding Brown-Forman’s Market Performance
In first-quarter fiscal 2026, net sales in the United States decreased 8% year over year on a reported basis and 2% on an organic basis, reflecting the absence of the prior-year Sonoma-Cutrer TSA, lower volumes of Jack Daniel’s Tennessee Whiskey and Herradura, and the conclusion of the Korbel relationship. These declines were partially offset by strong initial shipments of Jack Daniel’s Tennessee Blackberry and preparations for the Aug. 1, 2025, distributor transitions.
In developed international markets, net sales dipped 8% year over year and 9% on an organic basis, reflecting softer consumer demand amid ongoing macroeconomic and geopolitical pressures. The decline was led by reduced volumes of Jack Daniel’s Tennessee Whiskey in Germany and the U.K., and the absence of American-made spirits from retail shelves across most Canadian provinces. These headwinds were partially offset by favorable currency and the benefits of transitioning to an owned distribution model in Italy, which supported improved market presence and operational control.
Net sales in the emerging markets improved 20% on a reported basis and 25% on an organic basis, fueled by strong volume growth across the Jack Daniel’s family of brands, led by Brazil and Türkiye, with an added boost from higher distributor inventories. Double-digit gains in New Mix further supported the increase, though results were partially offset by unfavorable currency rates.
The Travel Retail channel net sales rose 8% on a reported basis and 7% on an organic basis, driven by increased volumes of Jack Daniel’s Tennessee Whiskey and Gin Mare. The increased volume was due to the timing of shipments and the positive currency effects.
A Peek at BF.B’s Brand Performance
In the fiscal first quarter, net sales for Whiskey products were flat year over year, both on a reported and organic basis, as strong initial shipments of Jack Daniel’s Tennessee Blackberry ahead of its launch and continued growth of Jack Daniel’s Tennessee Apple in Brazil were offset by lower volumes of Jack Daniel’s Tennessee Whiskey in the United States and Germany.
Net sales for the tequila portfolio fell 1% year over year on a reported basis but rose 1% on an organic basis. Herradura brand’s sales dropped 16% on a reported basis and 15% on an organic basis on softer U.S. volumes amid heightened category competition. Meanwhile, el Jimador’s net sales jumped 14% on a reported basis and 16% on an organic basis, supported by a refreshed bottle design, inventory builds tied to distributor transitions in 13 states, and the launch of the Cristalino expression.
The company witnessed year-over-year sales growth of 6% on a reported basis and 9% on an organic basis for the Ready-to-Drink (RTD) category. Sales for New Mix rallied 26% on a reported basis and 36% on an organic basis, led by category share gains, partly offset by FX headwinds. Jack Daniel’s RTD/Ready-to-Pours portfolio reported a sales drop of 2% on a reported basis and 1% on an organic basis, as Canadian declines outweighed U.S. growth.
The company’s rest of the portfolio sales plunged 27% year over year and 17% on an organic basis, reflecting the absence of Sonoma-Cutrer and Finlandia TSAs, and the end of the Korbel Champagne Cellars partnership. Offsetting factors included new agency brands in Japan and Mexico and Gin Mare growth in Italy.
BF.B’s Financial Health Snapshot
The company ended first-quarter fiscal 2026 with cash and cash equivalents of $471 million and long-term debt of $2.1 billion. Its total shareholders’ equity was $3.99 billion. As of July 31, 2025, BF.B had $160 million in cash from operating activities.
What to Expect From Brown-Forman in FY26?
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 projects an organic net sales decrease in the low-single digit. Organic operating income is likely to decline in the low-single digit. The effective tax rate is expected to be 21-23% and capital expenditure is anticipated to be $125-$135 million.
Stocks to Consider in the Consumer Staples Space
Celsius Holdings Inc. (CELH - Free Report) specializes in commercializing healthier, nutritional functional foods, beverages and dietary supplements. The company presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
CELH delivered a trailing four-quarter earnings surprise of 5.4%, on average. The Zacks Consensus Estimate for Celsius’ current financial-year sales and EPS indicates growth of 74.1% and 55.7%, respectively, from the year-ago reported numbers.
PepsiCo Inc. (PEP - Free Report) is one of the leading global food and beverage companies. It currently has a Zacks Rank of 2 (Buy).
PepsiCo delivered a trailing four-quarter earnings surprise of 1%, on average. The Zacks Consensus Estimate for PEP’s current financial-year sales indicates growth of 1.3% from the year-ago reported number and that for EPS suggests a 1.8% decline.
Zevia PBC (ZVIA - Free Report) focused on addressing health challenges resulting from excess sugar consumption by offering a portfolio of zero sugar, zero calorie, naturally sweetened beverages. It carries a Zacks Rank #2 at present.
The Zacks Consensus Estimate for ZVIA’s current financial-year sales and EPS implies growth of 3.8% and 48.4%, respectively, from the year-ago reported numbers. ZVIA delivered a trailing four-quarter average earnings surprise of 45.9%.
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Brown-Forman Q1 Earnings Miss Estimates, Sales Beat on Portfolio Gains
Key Takeaways
Brown-Forman Corporation (BF.B - Free Report) has reported mixed first-quarter fiscal 2026 results, wherein the top line beat the Zacks Consensus Estimate, while the bottom line missed the same. Both sales and earnings declined year over year. The fiscal first-quarter results highlight the decisive actions the company has taken to strengthen its business amid a challenging environment. With superior innovation and bold route-to-consumer strategies, it has built resilience to navigate persistent headwinds while sustaining growth.
Reaffirming its fiscal 2026 outlook further reflects confidence in its strategy and brand portfolio. The company remains committed to driving consistent performance and delivering long-term value for shareholders.
Brown-Forman’s shares rose 4.6% following the first-quarter fiscal 2026 results and a retained outlook for fiscal 2026. This Zacks Rank #4 (Sell) company’s shares have lost 10.7% in the past three months compared with the industry’s 8% decline.
Image Source: Zacks Investment Research
In the fiscal first quarter, earnings per share (EPS) of 36 cents fell 13% year over year and lagged the Zacks Consensus Estimate of 37 cents.
Net sales of $924 million declined 3% on a reported basis but beat the Zacks Consensus Estimate of $911 million. On an organic basis, net sales rose 1% from the prior-year period. The decline in net sales was primarily due to the lapse of the prior-year transition services agreement (TSA) tied to Sonoma-Cutrer.
Brown-Forman Corporation Price, Consensus and EPS Surprise
Brown-Forman Corporation price-consensus-eps-surprise-chart | Brown-Forman Corporation Quote
Brown-Forman’s Margins & Expenses
In the fiscal first quarter, BF.B’s gross profit of $552 million declined 2% year over year on a reported and organic basis. However, the gross margin expanded 40 basis points (bps) to 59.8%, aided by acquisitions and divestitures. This gain was partly offset by higher costs, an unfavorable price/mix and adverse foreign exchange.
Selling, general and administrative (SG&A) expenses of $177 million declined 6% year over year on a reported basis and 7% on an organic basis. The decrease was primarily due to reduced compensation and benefit-related expenses.
Operating income decreased 7% year over year to $260 million on a reported basis. However, the organic operating income rose 2%. The operating margin of 28.2% contracted 140 bps from 29.6% reported in the year-ago quarter. The decline was mainly attributable to unfavorable foreign exchange, the absence of the prior-year franchise tax refund and restructuring impacts, partially offset by benefits from substitution drawback claims.
Understanding Brown-Forman’s Market Performance
In first-quarter fiscal 2026, net sales in the United States decreased 8% year over year on a reported basis and 2% on an organic basis, reflecting the absence of the prior-year Sonoma-Cutrer TSA, lower volumes of Jack Daniel’s Tennessee Whiskey and Herradura, and the conclusion of the Korbel relationship. These declines were partially offset by strong initial shipments of Jack Daniel’s Tennessee Blackberry and preparations for the Aug. 1, 2025, distributor transitions.
In developed international markets, net sales dipped 8% year over year and 9% on an organic basis, reflecting softer consumer demand amid ongoing macroeconomic and geopolitical pressures. The decline was led by reduced volumes of Jack Daniel’s Tennessee Whiskey in Germany and the U.K., and the absence of American-made spirits from retail shelves across most Canadian provinces. These headwinds were partially offset by favorable currency and the benefits of transitioning to an owned distribution model in Italy, which supported improved market presence and operational control.
Net sales in the emerging markets improved 20% on a reported basis and 25% on an organic basis, fueled by strong volume growth across the Jack Daniel’s family of brands, led by Brazil and Türkiye, with an added boost from higher distributor inventories. Double-digit gains in New Mix further supported the increase, though results were partially offset by unfavorable currency rates.
The Travel Retail channel net sales rose 8% on a reported basis and 7% on an organic basis, driven by increased volumes of Jack Daniel’s Tennessee Whiskey and Gin Mare. The increased volume was due to the timing of shipments and the positive currency effects.
A Peek at BF.B’s Brand Performance
In the fiscal first quarter, net sales for Whiskey products were flat year over year, both on a reported and organic basis, as strong initial shipments of Jack Daniel’s Tennessee Blackberry ahead of its launch and continued growth of Jack Daniel’s Tennessee Apple in Brazil were offset by lower volumes of Jack Daniel’s Tennessee Whiskey in the United States and Germany.
Net sales for the tequila portfolio fell 1% year over year on a reported basis but rose 1% on an organic basis. Herradura brand’s sales dropped 16% on a reported basis and 15% on an organic basis on softer U.S. volumes amid heightened category competition. Meanwhile, el Jimador’s net sales jumped 14% on a reported basis and 16% on an organic basis, supported by a refreshed bottle design, inventory builds tied to distributor transitions in 13 states, and the launch of the Cristalino expression.
The company witnessed year-over-year sales growth of 6% on a reported basis and 9% on an organic basis for the Ready-to-Drink (RTD) category. Sales for New Mix rallied 26% on a reported basis and 36% on an organic basis, led by category share gains, partly offset by FX headwinds. Jack Daniel’s RTD/Ready-to-Pours portfolio reported a sales drop of 2% on a reported basis and 1% on an organic basis, as Canadian declines outweighed U.S. growth.
The company’s rest of the portfolio sales plunged 27% year over year and 17% on an organic basis, reflecting the absence of Sonoma-Cutrer and Finlandia TSAs, and the end of the Korbel Champagne Cellars partnership. Offsetting factors included new agency brands in Japan and Mexico and Gin Mare growth in Italy.
BF.B’s Financial Health Snapshot
The company ended first-quarter fiscal 2026 with cash and cash equivalents of $471 million and long-term debt of $2.1 billion. Its total shareholders’ equity was $3.99 billion. As of July 31, 2025, BF.B had $160 million in cash from operating activities.
What to Expect From Brown-Forman in FY26?
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 projects an organic net sales decrease in the low-single digit. Organic operating income is likely to decline in the low-single digit. The effective tax rate is expected to be 21-23% and capital expenditure is anticipated to be $125-$135 million.
Stocks to Consider in the Consumer Staples Space
Celsius Holdings Inc. (CELH - Free Report) specializes in commercializing healthier, nutritional functional foods, beverages and dietary supplements. The company presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
CELH delivered a trailing four-quarter earnings surprise of 5.4%, on average. The Zacks Consensus Estimate for Celsius’ current financial-year sales and EPS indicates growth of 74.1% and 55.7%, respectively, from the year-ago reported numbers.
PepsiCo Inc. (PEP - Free Report) is one of the leading global food and beverage companies. It currently has a Zacks Rank of 2 (Buy).
PepsiCo delivered a trailing four-quarter earnings surprise of 1%, on average. The Zacks Consensus Estimate for PEP’s current financial-year sales indicates growth of 1.3% from the year-ago reported number and that for EPS suggests a 1.8% decline.
Zevia PBC (ZVIA - Free Report) focused on addressing health challenges resulting from excess sugar consumption by offering a portfolio of zero sugar, zero calorie, naturally sweetened beverages. It carries a Zacks Rank #2 at present.
The Zacks Consensus Estimate for ZVIA’s current financial-year sales and EPS implies growth of 3.8% and 48.4%, respectively, from the year-ago reported numbers. ZVIA delivered a trailing four-quarter average earnings surprise of 45.9%.