Brown-Forman Corporation, the maker of Jack Daniel’s and a portfolio of leading spirits brands, announced financial results for the first quarter of fiscal 2026, ended July 31, 2025.
The company reported net sales down 3% to USD 924 million (+1% on an organic basis), operating income down 7% to USD 260 million (+2% organic), and diluted EPS of USD 0.36, down 13%.
Despite macroeconomic uncertainty, foreign exchange headwinds, and shifts in consumer behavior, the company emphasized the resilience of its business model and reaffirmed its full-year outlook.
“Our solid first-quarter performance reflects the decisive actions we’ve taken to strengthen our business in a challenging environment,” said Lawson Whiting, President and CEO. “Superior innovation and bold route-to-consumer strategies have positioned us to deliver resilient results. We are confident in our ability to create long-term value for shareholders.”
Key Q1 FY26 Highlights
- Net sales performance: The absence of the prior-year Sonoma-Cutrer transition services agreement (TSA) weighed on reported results. Growth in Emerging Markets and Travel Retail was offset by declines in the U.S. and Developed International markets.
- Margins: Gross margin expanded 40bps to 59.8%, supported by portfolio optimization and divestitures, though partially offset by higher costs and FX.
- Operating income: Declined 7% (but +2% organic), with margin contracting 140bps to 28.2%, pressured by FX and restructuring charges.
- EPS: Fell to USD 0.36, reflecting lower operating income and higher non-operating postretirement expenses.
Brand Performance
- Whiskey: Flat overall, with growth in new innovations offset by weaker volumes of Jack Daniel’s Tennessee Whiskey in the U.S. and Germany. Jack Daniel’s Tennessee Blackberry launch and Tennessee Apple growth in Brazil were key highlights.
- Tequila: Down 1% (+1% organic). Herradura declined 16% (-15% organic) due to U.S. competition, while el Jimador surged 14% (+16% organic), supported by a new bottle design, distributor transitions, and the launch of Cristalino.
- Ready-to-Drink (RTD): Up 6% (+9% organic). New Mix gained 26% (+36% organic) with strong share growth, while Jack Daniel’s RTD portfolio fell 2% (-1% organic), mainly in Canada.
- Rest of Portfolio: Down 27% (+17% organic), reflecting the absence of Sonoma-Cutrer, Finlandia TSA, and the end of the Korbel partnership. Growth came from agency brands in Japan and Mexico, and Gin Mare in Italy.
- Non-branded & bulk: Fell 44% due to lower used barrel sales.
Regional Performance
- United States: Sales fell 8% (-2% organic), with declines in Jack Daniel’s Tennessee Whiskey and Herradura, plus the absence of Sonoma-Cutrer and Korbel. Strong shipments of Jack Daniel’s Tennessee Blackberry ahead of August distributor transitions helped partially offset declines.
- Developed International Markets: Down 8% (-9% organic), reflecting weaker demand in Germany and the UK, and absence of U.S.-made alcohol in Canadian retail. Transition to owned distribution in Italy provided a partial offset.
- Emerging Markets: Up 20% (+25% organic), led by strong growth in Brazil and Türkiye for the Jack Daniel’s family of brands, along with robust RTD momentum. FX negatively impacted results.
- Travel Retail: Up 8% (+7% organic), boosted by Jack Daniel’s Tennessee Whiskey and Gin Mare, aided by shipment timing and FX.
Financial Stewardship
Brown-Forman continues to demonstrate financial discipline:
- Gross profit: Down 2% (-2% organic), though margin expanded.
- Advertising & promotion (A&P): Down 4% (-3% organic), as spending shifted from Jack Daniel’s Tennessee Whiskey and Korbel.
- SG&A: Down 6% (-7% organic), reflecting lower compensation expenses.
- Restructuring costs: USD 12 million in charges tied to the January 2025 initiative.
- Dividend: The Board declared a quarterly dividend of USD 0.2265 per share, payable October 1, 2025. The company remains a member of the S&P 500 Dividend Aristocrats Index, with 81 consecutive years of dividends and 41 years of increases.
Fiscal 2026 Outlook
Brown-Forman reaffirmed its full-year guidance, citing ongoing challenges but also strategic opportunities. The company expects:
- Organic net sales: Low single-digit decline.
- Organic operating income: Low single-digit decline.
- Tax rate: 21% to 23%.
- Capex: USD 125–135 million.
The company highlighted its ongoing U.S. distribution transformation, restructuring initiatives, and pipeline of new product innovation as key drivers of future growth.
“Fiscal 2026 will not be without headwinds,” said Whiting, “but the steps we are taking today—from portfolio innovation to strategic distribution changes—position us to capture opportunities and build long-term shareholder value.”
Source: Brown-Forman