Brown-Forman Corporation reported a decline in financial performance for the three months ended July 31, 2024, compared to the same period in the previous year. Total sales decreased to $1,211 million from $1,326 million, while net sales fell from $1,038 million to $951 million, marking an 8% decline. The decrease in net sales was attributed to lower volumes, negative impacts from acquisitions and divestitures, adverse foreign exchange effects, and the influence of the Jack Daniel's Country Cocktails (JDCC) brand.
Gross profit also saw a significant drop, declining to $565 million from $651 million, resulting in a gross margin of 59.4%, down from 62.7% in the prior year. Operating income decreased by 14% to $281 million, with an operating margin of 29.6%, down from 31.5%. Net income for the period was $195 million, down from $231 million, leading to diluted earnings per share of $0.41, a decrease of 14% from $0.48.
The company undertook strategic divestitures, selling its Finlandia vodka business for $196 million and the Sonoma-Cutrer wine business for a 21.4% stake in The Duckhorn Portfolio and $50 million in cash, resulting in pre-tax gains of $92 million and $175 million, respectively. Additionally, Brown-Forman acquired Gin Mare Brand, S.L.U. during fiscal 2023.
Geographically, net sales in the United States declined by 5%, primarily due to lower volumes from key brands, although Woodford Reserve saw increased volumes. Internationally, Germany and the United Kingdom experienced declines of 6% and 21%, respectively, while Brazil reported an 18% increase in net sales.
Cash and cash equivalents decreased to $416 million from $446 million, with approximately 41% held by foreign subsidiaries. Cash provided by operating activities fell to $17 million, down from $38 million in the previous year. The company’s long-term debt increased slightly to $2,684 million from $2,672 million.
Looking ahead, Brown-Forman anticipates organic net sales growth of 2% to 4% and organic operating income growth of 2% to 4% for fiscal 2025, with planned capital expenditures between $195 million and $205 million. The effective tax rate for the upcoming fiscal year is expected to be between 21% and 23%.
About BROWN FORMAN CORP
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