Brown-Forman Corp. (NYSE: BF.B) reported a 3 percent rise in second-quarter profit Tuesday on the strength of brisk sales for its flagship Jack Daniel's whiskey lineup, according to Associated Press.
The news offsets a sluggish performance for some other key brands. It also raised its outlook for the year.
Sales are surging for Brown-Forman's ready-to-drink products -- premixed cocktails typically offered in single-serving containers -- an indication that more consumers are choosing to drink at home rather than venturing out to bars and restaurants. The company also said some consumers are choosing less expensive drinks, which is another sign of the struggling economy.
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Brown-Forman reported a double-digit cut in advertising expenses for the second quarter and benefited from other belt-tightening measures, including a work force reduction announced earlier in the year.
Paul Varga, the company's chief executive officer, said Brown-Forman has "weathered the past 12 months very well and have continued to position our company and brands for success in the years ahead."
Its Class B shares rose 79 cents, or 1.5 percent, to $53.02 in morning trading Tuesday after setting a 52-week high of $55.47 earlier in the session.
The company, based in Louisville, said case sales trends for many of its key brands improved slightly in the second quarter over the prior three months, and it said it expects more favorable comparisons as the fiscal year continues.
However, overall net sales in the quarter slipped on weaker sales of Finlandia vodka and Southern Comfort.
The company said profit rose to $147.3 million, or 99 cents per share, for the quarter ended Oct. 31 from $143.2 million, or 94 cents per share, a year ago.
It said revenue slipped 4 percent to $892.9 million from $934.7 million a year ago. Analysts polled by Thomson Reuters had expected a quarterly profit of 84 cents per share on revenue of $883.7 million.
For the first six months of the year, the company said profit rose 16 percent to $268.6 million as sales fell 5 percent to $1.6 billion from the same period a year ago.
The company raised its earnings outlook for the full year to $2.95 to $3.15 per share, up from prior guidance of $2.60 to $3 per share. Analysts predict $2.87 per share.
U.S. case sales for the company's flagship Jack Daniel's Tennessee Whiskey declined by 1 percent in both the second quarter and in the first six months of the fiscal year. Internationally, sales were up slightly in the just-ended quarter but were down 1 percent for the six months, the company said.
Case sales for the entire lineup of Jack Daniel's products rose 12 percent for the first six months of the fiscal year, led by a 50 percent surge in Jack Daniel's ready-to-drink products. The company reported second-quarter case sales gains in France, Germany, the United Kingdom and Australia.
Finlandia had a 4 percent decline in global case sales during the first six months. The brand's performance was hurt by soft sales trends in its key Eastern Europe market as some consumers opted for smaller sizes of the brand, along with softer sales of the higher-margin flavored vodkas.
Southern Comfort's case sales fell by 8 percent in the six months as the struggling brand was hurt by weak sales at bars and restaurants around the world. Overall, Southern Comfort's entire lineup had a 1 percent drop in overall case sales, as sales for its ready-to-drink products surged by 52 percent in the six months.
The company's el Jimador tequila brand had a 7 percent gain in case sales during the six months, while its Korbel Champagne had a 1 percent decline. Case sales for its lineup of other super-premium brands, including Woodford Reserve, Chambord, Herradura, Bonterra and Sonoma-Cutrer, fell 5 percent in the six months.
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