Brown-Forman posts positive Q1 financial results

By Erin Smith

Published: 28 August, 2014

Brown-Forman's income increased by 7% despite sales not growing at the same rate as last year, said the company as it reported its first financial quarter results for the three months ending July 31 2014.

The first quarter of 2015 sales declined when compared to Q1 2014 "when sales benefited from significant distributor and retail buy-ins, related primarily to price increases", according to the company's statement. Although not at the same rate, sales for the first quarter of 2015 did see gains.

Paul Varga, chief executive at Brown-Forman, said: "As anticipated, our first quarter growth came in lower than what we achieved during fiscal 2014 and our expectations for fiscal 2015, due largely to pricing decisions that resulted in distributor and retail inventory reductions in the United States and Europe. We anticipate higher rates of sales growth over the balance of the year, led by Jack Daniel's and our portfolio of premium whiskey brands. We reaffirm our full-year guidance and our expectations of 9-11% underlying operating income growth in fiscal 2015."

Jack Daniels's continues to be the biggest driver for growth within the Brown-Forman portfolio. Jack Daniel's trademark grew net sales by 5% and Jack Daniel's Tennessee Honey grew underlying net sales 29%. Brown Forman's super and ultra-premium whiskey also achieved double digit growth with Woodford Reserve family brand growing 29%.

The company's tequila brands also helped contribute to growth with El Jimador and Herradura tequila growing underlying net sales by 15% and 20% respectively.

Global travel retail also grew underlying net sales by 22%.

Despite having a slower rate of growth compared to last year for the same period, the company affirms that it will deliver on its growth outlook for 2015.

"Assuming no deterioration in current global market conditions, the company is reaffirming its growth outlook for fiscal 2015, including 6-8% growth in reported and underlying net sales, and 9-11% growth in reported and underlying operating income. While first quarter results were negatively impacted by inventory reductions, the company expects stronger reported and underlying results over the balance of the year, driven by more stable inventory levels and expanding global demand for the company's portfolio of brands," according to the company's statement.

2014 will be a tough financial act to follow for the company as it was one of the most financially successful year's on record for Brown-Forman.

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