Sales slip for Brown-Forman during third quarter

The winter holidays left Brown-Forman, the Louisville-based parent of Jack Daniel’s and Woodford Reserve, a little blue.

The company reported Wednesday that net sales for the third quarter, which ended Jan. 31, declined 1 percent, to $1.08 billion. However, sales were up 4 percent on an underlying basis for the quarter, the company emphasized.

For the quarter, the company reported earnings of $190 million, up 2 percent, and 94 cents per diluted share, up 7 percent compared with the same quarter last year.

For the first nine months of the company’s fiscal year, reported net sales were down 2 percent, to $3.08 billion, resulting in flat profits of $545 million, or $2.65 per diluted share, up 4 percent.

Underlying sales for the first nine months were up 5 percent, the company said. Year-to-date reported sales growth was adversely affected by 8 percentage points because of foreign exchange rates.

“Against a backdrop of deteriorating economic conditions in emerging markets, weakness in the global travel retail channel and headwinds from a strengthening dollar, we had another solid quarter of underlying growth, led by the Jack Daniel’s family and our American whiskey brands,” CEO Paul Varga said in a news release.

In a conference call to discuss the results, Varga said Brown-Forman sales were hurt by the Paris terrorist attacks, economic difficulties in Germany and the uncertainty of the U.S. stock market.

Despite that, he said, the company delivered “a strong underlying quarter.”

Sales of the Jack Daniel’s family grew 7 percent on an underlying basis, with Jack Daniel’s Tennessee Honey up 11 percent. Sales of the premium bourbon Woodford Reserve were up 29 percent, and Old Forester bourbon, the company’s oldest brand, also saw double-digit increases.

Chief financial officer Jane Morreau said sales of Tennessee Fire topped 400,000 9-liter cases in the first 12 months of its release, drawing in new millennial consumers, especially women and Latinos. Based on test results, Brown-Forman is looking to expand Fire to the United Kingdom and Australia, Morreau said.

Developing markets were mixed, and emerging markets have experienced a significant slowdown over the past few quarters, the company said.

But Varga said that because Jack Daniel’s, one of the top-selling brands in the world, has a small market share in emerging markets in some of the world’s most populous countries, “I remain very bullish. As these markets grapple with local challenges, we’ll be patient.”

Morreau said travel sales started well, with a “very good November,” but the Nov. 13 Paris attacks contributed to softening sales, as did the worsening economy in Russia.

“The high spenders come from Russia,” she said.

Sales of Finlandia vodka, down 17 percent, or 5 percent on an underlying basis, also were hurt by the Russian downturn.

The company will celebrate the 150th anniversary this year of Jack Daniel’s and is completing a $140 million expansion at the Tennessee distillery. It also i in the midst of a $36 million expansion of Woodford Reserve in Versailles.

Brown-Forman is building a $45 million visitors center and distillery for Old Forester on Main Street in Louisville and a $50 million distillery at Slane Castle in Ireland.

This story was originally published March 2, 2016 at 9:17 AM with the headline "Sales slip for Brown-Forman during third quarter."