Brown-Forman, the Louisville-based parent of Jack Daniel’s, reported a 5 percent drop in net sales for the fourth quarter to $694 million, and a 3 percent drop of net sales for the full year to $2.99 billion.
But the company said that underlying sales were stronger, up 4 percent for the quarter and up 3 percent for the full year. The underlying numbers exclude the effects of foreign exchange rates and other changes such as the 2016 sale of Southern Comfort and the purchase of the BenRiach Distillery Co. in Scotland.
The year was another “of strong underlying growth and excellent progress in positioning Brown-Forman for continued gains in the years ahead,” said CEO Paul Varga in a statement. “Given the acceleration we experienced in the second half of the year, the investments we continue to make behind the business, and the expectation of improved contribution from innovation next year, we are forecasting another strong year in fiscal 2018.”
Brown-Forman predicted underlying sales growth of 4 to 5 percent for 2018, led by Jack Daniel’s and premium bourbons and tequilas. Coming soon: Jack Daniel’s Tennessee Rye and Slane Irish Whiskey, as well as single-malt scotch brands. For the full year, earnings are expected to be $1.80 to $1.90 per share
The company reported fourth-quarter profits of $144 million or 37 cents per diluted share, down 72 percent from the same quarter of 2016. For the full year, profits were $669 million or $1.71 per diluted share, down 37 percent compared to last year.
Varga and other executives will discuss quarterly and full-year results in a conference call at 10 a.m. that is available at brown-forman.com.
Underlying sales growth improved from 2 percent in the first half of the year to 4 percent in the second, the company said, with gains in both developed and emerging markets.
The Jack Daniel’s family had a boost in underlying sales, although reported sales were flat. Both Jack Daniel’s Tennessee Honey and Jack Daniel’s Tennessee Fire saw gains: Honey was up a reported 3 percent and Fire was up a reported 18 percent.
Super- and ultra-premium whiskey brands continued to be bright spots, with Woodford Reserve bourbon reporting 14 percent sales growth for the year. Old Forrester bourbon also saw double-digit growth.
Sales of Herradura tequila also jumped a reported 9 percent.
The company reported that large price increases in Japan helped underlying net sales to jump 18 percent in that market.
Travel retail, which includes tax-free sales in airports, picked up, helped primarily by the wider distribution of Woodford Reserve, improved airline business and stronger trends in European and Russian travel, the company reported.