Brown-Forman Corp., Louisville, Ky., reported financial results for its fourth quarter and fiscal year, which ended April 30. For the fourth quarter, the company’s reported net sales declined 5 percent to $709 million compared to the same prior-year period.
Reported operating income decreased 18 percent to $187 million and diluted earnings per share declined 20 percent to $0.27.
For the full year, the company’s reported net sales increased 1 percent to $3.4 billion (flat on an underlying basis). Reported operating income decreased 5 percent to $1.1 billion and diluted earnings per share declined 1 percent to $1.72.
“First, I speak on behalf of the entire Brown-Forman family in saying that our hearts and thoughts are with all who have been so deeply affected by COVID-19. While this is a business challenge, it is, above all, a human tragedy. I would like to thank our 4,800 employees for their exceptional agility and creativity in quickly shifting and adapting to the recent events in such a short period of time,” said Lawson Whiting, president and chief executive officer, in a statement. “Brown-Forman has endured and prevailed through many challenges over the last 150 years. We believe we are well positioned to successfully navigate the environment we face today and emerge stronger thanks to the continued support of our shareholders, including the Brown family, our healthy balance sheet, the resilience of our people, and the strength of our brands.”
The company completed its third quarter of the fiscal year on Jan. 31, registering a year-to-date net sales increase of 3 percent on both a reported and underlying basis with underlying net sales trends holding through February. In early March, the company revised its full-year outlook to include an estimate for the impact of COVID-19 on its results from Asia, most notably China, and Travel Retail only. Subsequent to that time, the rapid spread of the virus resulted in all of the company’s major markets being negatively affected.
“COVID-19 began to affect our performance in the middle of March and continued throughout April as both on-premise, representing approximately 20 percent of our business globally, and travel retail channels essentially came to a halt. We experienced strong growth in the off-premise (based on syndicated takeaway data) and e-Premise channels across most of our developed markets as country lockdowns and government restrictions took hold reflecting both an increase in at-home consumption and some pantry loading,” said Jane Morreau, the company’s executive vice president and chief financial officer.
Underlying net sales growth in the United States accelerated in fiscal 2020, increasing 5 percent, fueled in part by the fall 2019 launch of Jack Daniel’s Tennessee Apple, despite slower growth in the fourth quarter as COVID-19 related impacts began to take effect. Double-digit underlying net sales growth for Woodford Reserve, Old Forester, Jack Daniel’s RTDs, Herradura, and el Jimador collectively, also contributed to the growth for the year.
The company’s whiskey portfolio grew underlying net sales 2 percent. Jack Daniel’s family of brands’ underlying net sales were flat. Jack Daniel’s Tennessee Whiskey’s underlying net sales decline offset growth from Jack Daniel’s Tennessee Apple, Jack Daniel’s RTDs, and broad-based volume growth from Jack Daniel’s Tennessee Honey and Gentleman Jack.
Brown-Forman’s portfolio of premium bourbon brands, including Woodford Reserve and Old Forester, continued to grow underlying net sales double digits. Woodford Reserve, the leader in the super-premium American whiskey category, grew underlying net sales 19 percent and surpassed the 1 million 9-liter case milestone in fiscal 2020. Woodford Reserve’s growth was led by the United States, where consumer takeaway trends remain strong, along with broad-based volume growth internationally. Old Forester, the company’s 150-year-old founding brand, provided even stronger underlying net sales growth powered by volumetric gains and favorable mix from the brand’s high-end expressions.
Brown-Forman’s tequila brands grew underlying net sales 2 percent in fiscal 2020, as declines of New Mix were more than offset by underlying net sales growth of 7 percent on Herradura, reflecting double-digit volume growth in the United States. el Jimador also contributed to the company’s tequila portfolio growth for the year as underlying net sales grew 5 percent driven by higher volumes in the United States as consumer takeaway trends remain strong.