Brown-Forman Cuts Revenue Forecast as Sales Decline

Brown-Forman Corp., the maker of Jack Daniel's Tennessee whiskey, said its profit and sales declined in its second quarter as the company also cut its adjusted sales forecast.

Results were also hurt by divestitures of two liquor brands and adverse foreign exchange rates.

Brown-Forman now expects adjusted sales to grow between 4% and 5% this year, shaving 1% off the top end of its forecast. It also expects adjusted operating income to grow between 6% and 8%, down from between 7% and 9% previously. Still, it reaffirmed its adjusted earnings per share guidance of between $1.71 to $1.81, bracketing analysts' expectations.

In its latest quarter, the company reported a profit of $197 million, or 50 cents a share, compared with $200 million, or 49 cents a share, a year ago.

Brown-Forman said net sales after excise taxes fell 2.8% from a year earlier, to $830 million.

Analysts polled by Thomson Reuters expected sales of $837.3 million and per-share profit of 50 cents.

Emerging market sales fell 9% because weaker economic conditions and devalued currencies lead to reduced purchasing power. Adjusted sales grew in Poland and Mexico, the company's two largest emerging markets, leading to a 3% increase in adjusted emerging market sales, but adjusted sales fell in Turkey, Russia, Brazil and China.

Sales fell 1% in the U.S. and 5% in developed international markets. Both markets posted revenue growth on an adjusted basis. The U.S. had gains in various Jack Daniel's versions, including Tennessee Whiskey, Tennessee Honey and Gentleman Jack. International sales were hurt by holiday season promotions in the United Kingdom and "key customer buying patterns" in Germany. Results in Australia increased only slightly due to the weak economy and high excise taxes.

The Louisville, Ky., company in January said it struck a deal to sell Southern Comfort, its struggling sweet whiskey-flavored liquor, and Tuaca, an Italian liqueur, for $543.5 million to Sazerac Co. The sale was part of Brown-Forman's push to focus on Jack Daniel's and Woodford Reserve, which have grown in recent years behind a surge in American whiskey sales. In April it agreed to purchase the BenRiach Distillery Company Ltd. for $416 million deal to add Scotch whisky to its portfolio.

Write to Austen Hufford at [e-mail]

(END) Dow Jones Newswires

December 07, 2016 09:35 ET (14:35 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.