Brown-Forman Slips After Q2 Earnings Miss Highlights Spirits Slowdown
Jack Daniel's maker sees shares fall after a 14% drop in quarterly earnings per share, signaling persistent headwinds from soft consumer spending.
Shares of Brown-Forman Corporation (BF-B), the maker of Jack Daniel's whiskey, declined Wednesday after the company reported fiscal second-quarter earnings that fell short of analyst expectations, underscoring a persistent slowdown in the global spirits market.
The Louisville, Kentucky-based company saw its stock fall approximately 1.4% to $29.67 in afternoon trading. The decline followed the release of results for the quarter ending October 31, which revealed a 14% year-over-year drop in diluted earnings per share to $0.47, just missing the consensus estimate of $0.48. This overshadowed a slight beat on revenue, which came in at $1.04 billion against expectations of $1.03 billion, though it still represented a 5% decline from the prior year.
The results paint a picture of a challenging environment for spirits producers, who are grappling with shifting consumer habits and macroeconomic pressures. In its official announcement, Brown-Forman cited "soft consumer demand" and "dampened discretionary spending" as key factors impacting performance, particularly in the United States and developed international markets.
"As anticipated, the operating environment remains challenging, and our second quarter results reflect the continued normalization of the spirits industry," said Lawson Whiting, President and CEO of Brown-Forman, in the company's press release. He noted that the results were consistent with the company's expectations for the first half of the fiscal year.
Despite the quarterly miss and the tough market, Brown-Forman reaffirmed its full-year fiscal 2026 outlook. The company continues to project a low-single-digit decline in both organic net sales and organic operating income. This guidance suggests that management anticipates the current headwinds will persist through the remainder of the fiscal year but is confident in navigating the turbulence without a further downward revision.
The spirits industry has been facing a broad-based recalibration after a period of significant growth during the pandemic. Consumers are now pulling back on premium spirits amid inflationary pressures, and the company's portfolio is feeling the impact. For the first six months of its fiscal year, Brown-Forman reported a 2% decline in organic net sales, driven by lower volumes.
Performance among its flagship brands was mixed. While the Jack Daniel's family of brands saw a 2% decline in organic sales, its super-premium expressions, including Woodford Reserve and Old Forester, delivered growth. This highlights a bifurcation in the market where high-end, sought-after brands can maintain momentum even as the broader category slows.
The challenging quarter for Brown-Forman is indicative of a wider industry trend. Competitors have also signaled caution as consumers become more selective with their spending. The results will be closely watched by investors looking for signs of stabilization in the consumer staples sector, particularly in discretionary-leaning categories like alcoholic beverages. As one report noted, the focus remains on whether promotional activities during the holiday season can help invigorate sales volumes and offset weaker demand.