Brown-Forman's stock slides 11% as earnings lag estimates for Jack Daniel's parent

By Ciara Linnane

Company says slowing consumer spending has it tempering expectations for fiscal 2024

Brown-Forman Corp.'s stock tumbled 11% on Wednesday after the parent to Jack Daniel's whiskey posted weaker-than-expected fiscal second-quarter earnings and said a challenging operating environment has it tempering its expectations for the year.

The stock (BF.B) was leading S&P 500 decliners and was on track for its biggest one-day percentage decline since March 20, 2020, when it fell 13.6%, according to Dow Jones Market Data.

In the year to date, the stock has fallen 18.7%, to put it on track for its worst year since 1999, when it fell 24.3%. The S&P 500 SPX has gained 19% in the year to date.

On a call with analysts, Chief Executive Lawson Whiting sought to allay investor concerns.

"Fundamentally, our brands remain in very strong shape,' he said, according to a FactSet transcript. "However, over the last couple of months, we have seen a slowdown in consumer spending similar to the trends we're seeing across total distilled spirits and other consumer packaged goods."

See also: Constellation Brands swings back to profit but guidance leaves analysts unimpressed

The company had net income of $242 million, or 50 cents a share, for the quarter to Oct. 31, up from $227 million, or 47 cents a share, in the year-earlier period. Sales rose 1% to $1.107 billion. The FactSet consensus was for earnings per share of 51 cents and sales of $1.149 billion.

"While we grew at a slower pace than anticipated, we delivered strong gross margin expansion and continued to invest strongly behind our brands," Whiting said in a statement.

The company now expects full-year organic sales growth of 3% to 5%, down from guidance of 5% to 7% offered with first-quarter earnings. Organic sales strip out the impact of foreign exchange and acquisitions.

"While we remain optimistic about our prospects for growth of organic net sales and organic operating income in fiscal 2024, evolving global macroeconomic conditions continue to create a challenging operating environment tempering our expectations," the statement said.

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-Ciara Linnane

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12-06-23 1138ET

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