Brown-Forman Q1 sales slide due to currency headwinds
Brown Forman first quarter sales slide 5% to US$ 661m due to on going currency headwinds and challenges in emerging regions, but underlying net sales increased 2%.
Brown-Forman first quarter sales slide 5% to US$ 661m due to on going currency headwinds and challenges in emerging regions, but underlying net sales increased 2%.
Emerging markets took the biggest hit and "did not stabilise as expected, and continued to decline during the first quarter. Underlying net sales dropped -5% (-17% reported), as the company believes that weaker economic conditions, devalued currencies and political instability have negatively impacted underlying demand," according to the financial statement.
Turkey, Russia, Brazil, China, Thailand and serveral markets in eastern Europe were down year over year.
Paul Varga also stated that following the successful launch of Jack Daniel's Tennessee Fire in the US made a year over year comparison of growth difficult.
"Our first quarter reported results came in largely as anticipated considering the absence of previously disposed brands and the difficult comparisons against last year's launch of Jack Daniel's Tennessee Fire in the United States. While our results continue to be hampered by the combined effects of adverse foreign exchange and challenging emerging market conditions, we still expect fiscal 2017 to be another year of solid underlying sales and operating income growth, driven by the Jack Daniel's family of brands, as well as our portfolio of premium bourbons and tequilas," said Varga.
Premium whiskey brands as well as the BF tequila brands helped to shore up some of decline. Woodford Reserve saw sales climb a reported 19%, Herradura reported net sales rose 16% and El Jimador increased 9%.
The company repurchased 4.2 million Class A and Class B shares and as of 31 July 2016 had repurchased a total of $690m worth of outstanding shares. The company on 18 August implemented a two-for-one split.
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