LOUISVILLE, KY — Brown‑Forman Corporation (NYSE: BFA, BFB) reported financial results for its first quarter of fiscal 2025, ended July 31, 2024, with net sales decreasing 8%¹ to $1.0 billion (-4% on an organic basis²) compared to the same prior year period. Operating income decreased 14% to $281 million (-13% on an organic basis) and diluted earnings per share decreased 14% to $0.41.

Lawson Whiting, Brown‑Forman’s President and Chief Executive Officer shared, “Our first quarter results were in line with our expectations and, as such, we are pleased to reaffirm our full-year fiscal 2025 guidance, including organic top and bottom line growth and continued reported gross margin expansion. We believe we have the right strategy, brands, and geographic breadth in place to effectively manage through the challenging consumer and cost environment, and are inspired every day by the talent, resilience, and creativity of our people.”

First Quarter of Fiscal 2025 Highlights

• From a brand perspective, the net sales growth of Diplomático Rum, Old Forester, and Woodford Reserve were more than offset by net sales declines led by Jack Daniel’s Tennessee Whiskey and the Finlandia divestiture.
• Net sales declined across all geographic aggregations partially due to the timing of shipments in the year-ago period related to inventory replenishment and the execution of our pricing strategy.
• Gross profit declined 13% (-8% organic) with a gross margin reduction of 330 basis points largely related to the timing of input cost fluctuations coupled with high inventory levels.
• Operating expenses declined by 12%  (-3% organic).

First Quarter of Fiscal 2025 Brand Results

• Net sales for Whiskey³ products decreased 5% (-3% organic). The growth of Old Forester and Woodford Reserve were more than offset by lower volumes of Jack Daniel’s Tennessee Whiskey, partially due to comparisons against the timing of shipments in the year ago period in the United States, the United Arab Emirates, and United Kingdom. Jack Daniel’s Tennessee Whiskey was also impacted by the negative effect of foreign exchange, primarily reflecting the strengthening of the dollar against the Turkish lira.
• Net sales for the Tequila³ portfolio declined 23% (-23% organic). el Jimador’s net sales declined 26% (-26% organic) led by lower volumes in the United States, Colombia, and Mexico. Herradura’s net sales declined 15% (-14% organic) led by lower volumes in Mexico, which experienced a challenging economic environment.
• Net sales for the Ready-to-Drink³ (RTD) portfolio declined 12% (-4% organic). New Mix’s net sales declined 11% (-9% organic) driven by lower volumes in Mexico, while gaining market share. Net sales of Jack Daniel’s RTD/RTP portfolio declined 13% (-2% organic) led by lower volumes due to the impact of the Jack Daniel’s Country Cocktails business model change (JDCC)².
• Rest of Portfolio's³ net sales declined 18% (+1% organic) driven by the Finlandia divestiture and the negative effect of foreign exchange. The decrease was partially offset by the positive contribution from Diplomático related to the timing of order patterns in the same prior-year period.

First Quarter of Fiscal 2025 Market Results                                                                                      

• Net sales in the United States declined 5% (-4% organic) driven by lower volumes in a challenging economic environment, led by Jack Daniel’s Tennessee Whiskey, el Jimador, and Korbel California Champagnes along with the negative impact of JDCC. The declines were partially offset by growth of Woodford Reserve and Old Forester as these brands continued to outperform the US Whiskey category. Consistent with company expectations, distributors are continuing to target the low end of their normal inventory range as continued high inflation and interest rates are negatively impacting the consumer and the trade.
• During a period of softening industry trends, collective net sales of Developed International³ markets declined 9% (-6% organic). The decrease was led by lower volumes of Jack Daniel’s Tennessee Whiskey across the majority of markets, most notably in the United Kingdom, and the Finlandia divestiture. The decline was partially offset by higher volumes of Jack Daniel’s Tennessee Whiskey in Japan due to changes in distributor ordering patterns in the same prior-year period in advance of the transition to owned distribution on April 1, 2024.
• Lapping strong double-digit growth and inventory replenishment, net sales in Emerging³ markets declined 16% (-5% organic). The decrease was driven by the decline of New Mix and our Tequila portfolio in Mexico, and Jack Daniel’s Tennessee Whiskey in the United Arab Emirates. The decline was also impacted by the negative effect of foreign exchange, primarily reflecting the strengthening of the dollar against the Turkish lira, and the Finlandia divestiture. The decline was partially offset by higher prices led by Jack Daniel’s Tennessee Whiskey in Türkiye along with higher volumes of Jack Daniel’s Tennessee Apple in Brazil.
• The Travel Retail³ channel’s net sales declined 11% (-8% organic) driven by lower volumes of Jack Daniel’s super-premium expressions and Woodford Reserve, as well as the Finlandia divestiture. The decline was partially offset by growth from Diplomático.

First Quarter of Fiscal 2025 Other P&L Items

• Gross profit decreased 13% (-8% organic) resulting in a gross margin reduction of 330 basis points to 59.4%. The decrease in gross margin was largely driven by the timing of input cost fluctuations coupled with high inventory levels, and the impact of the transition services agreements (TSAs) for the divestitures of Finlandia and Sonoma‑Cutrer. The decrease was partially offset by favorable price/mix and the impact of JDCC².
• Advertising expense decreased 4% (-1% organic) due to lower Jack Daniel’s & Coca-Cola RTD spend as compared to the prior-year period launch in the United States, as well as the impact of our recently divested brands. The reductions were partially offset by an increase in Jack Daniel’s Tennessee Whiskey advertising expense.
• Selling, general, and administrative expenses decreased 6% (-5% organic) led by lower compensation-related expenses.
• The company’s operating income decreased 14% (-13% organic) with an operating margin decrease of 200 basis points to 29.6%. The decrease in operating margin was largely driven by the timing of input cost fluctuations coupled with high inventory levels, the impact of the TSAs for the divestitures of Finlandia and Sonoma‑Cutrer, and the negative effect of foreign exchange. The decrease was partially offset by the gain on sale of the Alabama cooperage, Franchise Tax Refund², and favorable price/mix.
• Diluted earnings per share decreased $0.07 driven primarily by the decrease in operating income.

First Quarter of Fiscal 2025 Financial Stewardship

On July 25, 2024, the Brown‑Forman Board of Directors declared a regular quarterly cash dividend of $0.2178 per share on its Class A and Class B common stock. The dividend is payable on October 1, 2024, to stockholders of record on September 3, 2024. Brown‑Forman, a member of the prestigious S&P 500 Dividend Aristocrats Index, has paid regular quarterly cash dividends for 80 consecutive years and has increased the regular dividend for 40 consecutive years.

Fiscal 2025 Outlook

We anticipate a return to growth for organic net sales and organic operating income in fiscal 2025 driven by gains in international markets and the benefit of normalizing inventory trends. This outlook is tempered by our belief that global macroeconomic and geopolitical uncertainties will continue to create a challenging operating environment. Accordingly, we reiterate the following expectation for fiscal 2025:

• Organic net sales growth in the 2% to 4% range.
• Organic operating income growth in the 2% to 4% range.
• Our effective tax rate to be in the range of approximately 21% to 23%.
• Capital expenditures planned to be in the range of $195 to $205 million.

Click here for the full financial results.

Conference Call Details

Brown‑Forman will host a conference call to discuss these results at 10:00 a.m. (ET) today. A live audio broadcast of the conference call, and the accompanying presentation slides, will be available via Brown‑Forman’s website, brown-forman.com, through a link to “Investors/Events & Presentations.” A digital audio recording of the conference call and the presentation slides will also be posted on the website and will be available for at least 30 days following the conference call.

Brown‑Forman Corporation has been building exceptional spirits brands for more than 150 years, responsibly upholding our founding promise of “Nothing Better in the Market.” Our portfolio of premium brands includes the Jack Daniel’s Family of Brands, Woodford Reserve, Herradura, el Jimador, Korbel, New Mix, Old Forester, The Glendronach, Glenglassaugh, Benriach, Diplomático Rum, Chambord, Gin Mare, Fords Gin, Slane, and Coopers’ Craft. With a team of approximately 5,700 employees worldwide, we proudly share our passion for premium beverages in more than 170 countries. Discover more about us at brown-forman.com and stay connected through LinkedIn, Instagram, and X.

Important Information on Forward-Looking Statements:

This press release contains statements, estimates, and projections that are “forward-looking statements” as defined under U.S. federal securities laws. Words such as “aim,” “ambition,” “anticipate,” “aspire,” “believe,” “can,” “continue,” “could,” “envision,” “estimate,” “expect,” “expectation,” “intend,” “may,” “might,” “plan,” “potential,” “project,” “pursue,” “see,” “seek,” “should,” “will,” “would,” and similar words indicate forward-looking statements, which speak only as of the date we make them. Except as required by law, we do not intend to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. By their nature, forward-looking statements involve risks, uncertainties, and other factors (many beyond our control) that could cause our actual results to differ materially from our historical experience or from our current expectations or projections. These risks and uncertainties include, but are not limited to:

• Our substantial dependence upon the continued growth of the Jack Daniel's family of brands
• Substantial competition from new entrants, consolidations by competitors and retailers, and other competitive activities, such as pricing actions (including price reductions, promotions, discounting, couponing, or free goods), marketing, category expansion, product introductions, or entry or expansion in our geographic markets or distribution networks
• Route-to-consumer changes that affect the timing of our sales, temporarily disrupt the marketing or sale of our products, or result in higher fixed costs
• Disruption of our distribution network or inventory fluctuations in our products by distributors, wholesalers, or retailers
• Changes in consumer preferences, consumption, or purchase patterns – particularly away from larger producers in favor of small distilleries or local producers, or away from brown spirits, our premium products, or spirits generally, and our ability to anticipate or react to them; further legalization of marijuana; bar, restaurant, travel, or other on-premise declines; shifts in demographic or health and wellness trends; or unfavorable consumer reaction to new products, line extensions, package changes, product reformulations, or other product innovation
• Production facility, aging warehouse, or supply chain disruption
• Imprecision in supply/demand forecasting
• Higher costs, lower quality, or unavailability of energy, water, raw materials, product ingredients, or labor
• Risks associated with acquisitions, dispositions, business partnerships, or investments – such as acquisition integration, termination difficulties or costs, or impairment in recorded value
• Impact of health epidemics and pandemics, and the risk of the resulting negative economic impacts and related governmental actions
• Unfavorable global or regional economic conditions and related economic slowdowns or recessions, low consumer confidence, high unemployment, weak credit or capital markets, budget deficits, burdensome government debt, austerity measures, higher interest rates, higher taxes, political instability, higher inflation, deflation, lower returns on pension assets, or lower discount rates for pension obligations
• Product recalls or other product liability claims, product tampering, contamination, or quality issues
• Negative publicity related to our company, products, brands, marketing, executive leadership, employees, Board of Directors, family stockholders, operations, business performance, or prospects
• Failure to attract or retain key executive or employee talent
• Risks associated with being a U.S.-based company with a global business, including commercial, political, and financial risks; local labor policies and conditions; protectionist trade policies, or economic or trade sanctions, including additional retaliatory tariffs on American whiskeys and the effectiveness of our actions to mitigate the negative impact on our margins, sales, and distributors; compliance with local trade practices and other regulations; terrorism, kidnapping, extortion, or other types of violence; and health pandemics
• Failure to comply with anti-corruption laws, trade sanctions and restrictions, or similar laws or regulations
• Fluctuations in foreign currency exchange rates, particularly a stronger U.S. dollar
• Changes in laws, regulatory measures, or governmental policies, especially those affecting production, importation, marketing, labeling, pricing, distribution, sale, or consumption of our beverage alcohol products
• Tax rate changes (including excise, corporate, sales or value-added taxes, property taxes, payroll taxes, import and export duties, and tariffs) or changes in related reserves, changes in tax rules or accounting standards, and the unpredictability and suddenness with which they can occur
• Decline in the social acceptability of beverage alcohol in significant markets
• Significant additional labeling or warning requirements or limitations on availability of our beverage alcohol products
• Counterfeiting and inadequate protection of our intellectual property rights
• Significant legal disputes and proceedings, or government investigations
• Cyber breach or failure or corruption of our key information technology systems or those of our suppliers, customers, or direct and indirect business partners, or failure to comply with personal data protection laws
• Our status as a family “controlled company” under New York Stock Exchange rules, and our dual-class share structure

For further information on these and other risks, please refer to our public filings, including the “Risk Factors” section of our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission.