Brown-Forman Corporation, the maker of globally recognized brands such as Jack Daniel’s, Woodford Reserve, and Herradura, has released its financial results for the second quarter and first half of fiscal 2026, ending October 31, 2025.
The company reported lower net sales, operating income, and earnings per share, reflecting ongoing challenges across key markets. Despite these headwinds, Brown-Forman reaffirmed its full-year outlook, citing stable performance aligned with expectations and improved visibility for the remainder of the year.
Second Quarter: Net Sales and Earnings Down
In Q2, reported net sales declined 5% to USD 1.0 billion (−2% organic), compared to the same period last year. Operating income dropped 10% to USD 305 million (−9% organic), while diluted earnings per share decreased 14% to USD 0.47.
President and CEO Lawson Whiting stated that the quarter reflected “a continuation of the themes we saw in the first quarter,” emphasizing resilience in a difficult market environment. Brown-Forman continues to execute strategic plans despite macroeconomic volatility and competitive pressures.
First Half Results: Declines, but Stable Organic Performance
For the first six months of fiscal 2026, the company posted:
- Net sales: USD 2.0 billion (−4% reported, flat organic)
- Operating income: USD 565 million (−9% reported, −4% organic)
- EPS: USD 0.83 (−13%)
Key drivers of the decline were the end of the Korbel Champagne Cellars partnership, the expiration of Sonoma-Cutrer transition service agreements, and pressure in the United States and Developed International markets. Yet, Brown-Forman noted gross margin expansion of 30 basis points, supported by portfolio changes and disciplined cost management.
Cash flows improved significantly, with operating cash flow increasing USD 163 million to USD 292 million.
Brand Performance: Mixed Results Across Categories
Whiskey Portfolio – Flat Performance
Jack Daniel’s Tennessee Blackberry delivered a strong launch, and Woodford Reserve showed gains due to inventory movements. However, declines in Jack Daniel’s Tennessee Whiskey and Tennessee Honey offset these improvements.
Tequila Portfolio – Down 3%
Herradura fell 11%, especially in the U.S. market, while el Jimador grew modestly thanks to demand in Colombia and improved U.S. distributor inventories.
RTD Portfolio – Up 5%
A highlight for the company, driven by New Mix, which grew 28% (+30% organic) with notable strength in Mexico. Jack Daniel’s RTDs declined due to regulatory restrictions in Canada.
Rest of Portfolio – Down 35% (Reported)
This steep decline is tied to the end of the Korbel relationship and the absence of past service agreements. On an organic basis, however, the segment grew 22%, helped by new agency brands in Japan and Mexico and strong growth from Gin Mare.
Non-Branded & Bulk – Down 61%
Lower used-barrel sales significantly impacted this segment.
Market Results: Contrasting Regional Dynamics
United States – Down 9%
The largest market was heavily impacted by the end of Korbel and Sonoma-Cutrer agreements, along with softer volumes for key brands. Some gains were made through the launch of Tennessee Blackberry and improved distributor terms.
Developed International – Down 4%
Ongoing challenges in Canada, Germany and the United Kingdom weighed on results. Positives included FX tailwinds, new agency brands in Japan, and benefits from assuming direct distribution in Italy.
Emerging Markets – Up 10%
Strong growth from New Mix, Jack Daniel’s in Brazil and Türkiye, and higher distributor inventories supported double-digit expansion.
Travel Retail – Up 7%
Higher volumes of Jack Daniel’s Tennessee Whiskey and favorable FX boosted performance.
Profitability and Costs
- Gross profit declined 4% (−3% organic).
- Gross margin increased to 59.5% thanks to portfolio changes.
- Advertising spending decreased 2%, reflecting a more focused strategy.
- SG&A fell 3% due to lower compensation expenses.
- The company recorded USD 16 million in restructuring charges and a USD 22 million pension settlement charge related to early retirement programs.
Operating margin dropped 150 basis points to 28.9%, primarily due to lower gross profit and special charges.
Financial Stewardship: Dividend Raised and Share Repurchases Approved
Brown-Forman continues its long tradition of returning value to shareholders:
- The quarterly dividend was increased by 2%, marking 42 consecutive years of dividend growth.
- A USD 400 million share repurchase program was authorized through October 2026.
- As of October 31, USD 301 million remained available.
The company also reported strong cash flow improvements, supported by lower capex needs and disciplined working capital management.
Outlook for Fiscal 2026: Guidance Reaffirmed
Despite persistent macroeconomic and geopolitical uncertainty, Brown-Forman reaffirmed its full-year guidance. The company expects:
- Organic net sales: Low-single-digit decline
- Organic operating income: Low-single-digit decline
- Tax rate: 21–23%
- Capital expenditures: USD 110–120 million (updated from 125–135 million)
Strategic initiatives—including U.S. distribution evolution, restructuring efforts, and new product innovation—are expected to support long-term growth.
Source: Brown-Forman