Brown-Forman Corp. said net sales for fiscal 2016, ended April 30, were $4.011 billion, a 2% decrease from the prior fiscal year’s sales. The company blamed foreign exchange for the sales decline, saying that without ForEx impact, the company’s sales would have risen 5%.
The company recorded a net profit of $684 million, or $3.23 a share, a 56% increase.
The Jack Daniel’s family of brands grew underlying net sales 6% (-1% reported), with Jack Daniel’s Tennessee Honey underlying net sales growing 9% (0% reported).
The company’s super- and ultra-premium whiskey brands4 grew underlying net sales double digits, including 28% underlying net sales growth from Woodford Reserve (+29% reported)
Herradura grew underlying net sales 13% (0% reported), el Jimador grew underlying net sales 5% (-5% reported) and New Mix RTDs grew underlying net sales 23% (+2% reported)
Developed markets including the United States grew underlying net sales 6% (+1% reported).
Sales growth in the United States was powered by the Jack Daniel’s family of brands which grew underlying net sales by mid-single digits. Jack Daniel’s Tennessee Whiskey continued its upward trajectory, growing to 5.2 million cases, and combined depletions for Jack Daniel’s Tennessee Honey and Tennessee Fire surpassed one million cases in the United States.
In addition to growing Gentleman Jack‘s underlying net sales by 10% in the United States (6% reported), the company sustained a high rate of growth for its premium bourbon brands, including 25% underlying net sales growth (29% reported) for Woodford Reserve and 48% for Old Forester (48% reported). Herradura and el Jimador tequilas grew underlying net sales by high-teens in the United States.
The developed markets outside of the United States experienced an acceleration in their underlying net sales trends compared to fiscal 2015, growing 6% (-3% reported).
Emerging Markets Slow
The company noted that “while the emerging markets have historically been a significant contributor to our incremental growth, we experienced a marked slowdown during fiscal 2016 as weakening economic conditions and currency devaluations dampened consumer’s purchasing power. Aggregate underlying net sales grew 4% (-10% reported) in the emerging markets.
“This year was a tale of two halves, with emerging markets growing underlying net sales by 8% in the first half and only 1% in the second half. The emerging markets displayed some signs of stabilization, with the fourth quarter’s rate of growth in-line with the third quarter’s growth.
Turkey, Brazil, South Africa and Ukraine each delivered double-digit underlying net sales growth. Russia’s underlying net sales declined 17% and southeast Asia dropped double-digits, led by declines in Indonesia due to recent changes to industry regulation of import duties. Mexico grew underlying net sales 6%, while Poland grew only 1% due to a challenging competitive environment in vodka.
Travel Retail’s underlying net sales decreased 12% (-18% reported). Travel retail’s results were pressured by the decline in spending from travelers, as well as continued volatility in foreign exchange, which has also resulted in weaker consumer demand and a reduction in the historic price gap between travel retail and local economy.
Outlook for Fiscal 2017
Looking ahead to fiscal 2017, the company said that “assuming no further deterioration in the global economy in fiscal 2017, particularly in the emerging markets, the company anticipates:
“1. Underlying net sales growth of 4% to 6%, led by our premium American whiskey brands
“2. Underlying operating income growth of 7% to 9%
“3. Diluted earnings per share of $3.42 to $3.62, which includes expected foreign exchange headwinds of $0.07 given current spot rates, as well as lower distributor inventory levels.”