Brown-Forman’s third-quarter profits came in below expectations after struggling to keep a lid on rising costs.
The maker of whiskey brands such as Jack Daniel’s and Woodford Reserve saw reported operating income fall by 50 per cent to $173m (-11 per cent on an organic basis) on net sales up 4 per cent to $1.1bn (+5 per cent organic).
As well as soaring transportation and input costs, the company’s selling, general and administrative expenses rose 14 per cent, while advertising charges increased 21 per cent.
Continued consumer desire for convenience and flavor drove gains in Jack Daniel’s RTDs, Jack Daniel’s Tennessee Fire, and Jack Daniel’s Tennessee Honey. In addition, reported net sales also benefited from the launch of the brand’s new Jack Daniel’s Bonded. Premium bourbons, propelled by very strong double-digit net sales growth from Woodford Reserve and Old Forester, delivered 33 per cent reported net sales growth.
Ready-to-Drinks (RTDs) also saw growth which was driven by consumer preference for convenience and flavor.
Despite the slower growth in the latest quarter, Brown-Forman forecasted full-year organic net sales growth in the range of 8 per cent to 10 per cent, which was roughly in line with its prior outlook. The company also retained its high-single-digit growth outlook for annual operating income, citing easing supply chain constraints.
Lawson Whiting, Brown‑Forman’s President and Chief Executive Officer stated, that the maker continues to deliver strong net sales growth year-to-date, as "we executed our strategic priorities and invested boldly behind our brands and our people".
“Even as trends begin to normalize, we believe our business will remain robust given the premiumization of our portfolio, the health of our brands, and the resolve of our people. We also believe our long-term perspective enables us to navigate the changes of our world and drive consistent, reliable growth year after year," he added.
