Brown-Forman Inc (BF) shares slipped Thursday after the spirits powerhouse delivered a quarter that looked softer on paper but apparently went according to plan internally. Sometimes "meeting expectations" doesn't mean meeting Wall Street's expectations, and that's exactly what happened here.
The Louisville-based company behind Jack Daniel's, Old Forester, Woodford Reserve, GlenDronach, BenRiach, Glenglassaugh, Herradura, Korbel, and Chambord reported second-quarter earnings of 47 cents per share, just missing the 48-cent consensus estimate. Quarterly sales came in at $1.036 billion, down 5% from the prior year.
Here's the interesting part: even as profits and revenue declined, executives said the trends were essentially what they anticipated, and they're standing by their full-year outlook. That takes a certain level of confidence when your stock is trading down on the news.
Breaking Down the Numbers
"Our second quarter results reflect a continuation of the themes we saw in the first quarter, and the first half of the year unfolded largely as we expected," said Lawson Whiting, Brown-Forman's President and CEO.
Operating income dropped 10% to $305 million, while the operating margin squeezed down to 29.4% from 31.1% a year earlier. Gross profit fell 5% to $615 million, though gross margin actually expanded slightly to 59.3% from 59.1%, which is at least a small bright spot.
The balance sheet showed some movement too. Cash and equivalents stood at $319 million at quarter-end, down from $444 million in April. On the flip side, long-term debt improved, declining to $2.072 billion from $2.421 billion.
Brand Performance Tells the Real Story
Looking at the first half of fiscal 2026, whiskey products posted flat net sales on both reported and organic bases. The launch of Jack Daniel's Tennessee Blackberry and stronger Woodford Reserve sales, boosted by U.S. distributor inventories and transitions, managed to offset weaker volumes for Jack Daniel's Tennessee Whiskey and Jack Daniel's Tennessee Honey.
The tequila portfolio had a rougher go, with net sales declining 3% on both reported and organic bases. Herradura's net sales tumbled 11%, reflecting softer U.S. volumes in what's become a brutally competitive category. Meanwhile, el Jimador managed to eke out a 1% increase (2% organic) thanks to higher volumes in Colombia and an estimated inventory build at U.S. distributors.
"While the operating environment continues to be challenging, our team remains resilient and focused on executing our plans. Based on this performance and our visibility into the remainder of the year, we are pleased to reaffirm our fiscal year guidance," Whiting added.
BF/B Price Action: Brown-Forman Class B Common Stock shares were down 0.56% at $29.92 at the time of publication on Thursday.