Jack Daniel's maker Brown-Forman has today beaten fourth-quarter profit expectations, as price hikes on its premium whiskey and tequila helped offset waning demand.
Gains from price hikes across the portfolio and lower supply chain costs helped the company counter higher raw materials costs such as agave, a key ingredient for tequila, and wood barrels.
Brown-Forman reported earnings per share of 56 cents for the quarter ended April 30, while analysts, on average, estimated it to earn 42 cents, according to LSEG data.
The el Jimador tequila maker's quarterly gross margin fell to 59% from 60.8% a year earlier, mainly due to increased advertising expenses and input costs.
However, the price hikes over the past few quarters have led to some consumers cutting back spending on its higher-margin liquor, causing an 8% decline in quarterly net sales to $964m.
For the fourth quarter, the company reported net sales of $964m compared with analysts' estimates of $1.03 billion.
Brown-Forman reported a 2% decline in the organic sales of its Whiskey products owing to lower volumes for Jack Daniel's Tennessee Whiskey and Jack Daniel's Tennessee Honey, reflecting an estimated net decrease in distributor inventories.
The company, which saw a 7% drop in organic sales of its tequila business, forecast annual organic sales growth in the range of 2% to 4%, the midpoint of which is slightly below analysts' estimates of 3.68% growth.
