Brown-Forman Corporation (NYSE:BFA)(NYSE: BFB) today reported financial results for its first quarter of fiscal 2013. The company grew reported net sales by 4% to $878.1 million in the quarter 1, a 10% increase on an underlying basis 2. Reported net sales growth benefited from buy-ins related to price increases that were implemented in the quarter, offset by the negative impact from foreign exchange and the absence of Hopland-based wines. Reported operating income increased 19% to $221.7 million, up 17% on an underlying basis. After adjusting for the three-for-two stock split that occurred on August 10, diluted earnings per share for the first quarter increased 27% to $0.69 compared to $0.54 in the prior year period.
Paul Varga, the company’s chief executive officer said, “Building from our strong fiscal 2012 results, Brown-Forman is off to a great start in fiscal 2013. Underlying net sales growth of 10% in the first quarter was driven by the continued strength of our Jack Daniel’s trademark as well as improving results from other brands in our premium portfolio.”
First Quarter 2013 Highlights
- Underlying net sales increased 10%, driven by broad-based geographic gains, with constant currency net sales 3 up 14%:
- Price/mix contributed 1% to underlying sales growth in the quarter
- Jack Daniel’s trademark grew net sales 15%, including double-digit growth from Tennessee Honey, resulting from its geographic expansion outside of the U.S.
- Southern Comfort’s family of brands’ net sales declined 1%, while U.S. net sales grew in the quarter
- Finlandia’s family of brands grew net sales 20%
- El Jimador family of brands grew net sales 11%
- Underlying operating income increased 17%, driven primarily by revenue growth, gross margin expansion, and some leverage with operating expenses.
The 15% net sales growth for Jack Daniel’s family of brands was driven by a combination of strong underlying demand across the family of brands as well as buy-ins in advance of price increases. Innovation also continued to fuel the trademark’s growth as Jack Daniel’s Tennessee Honey grew global net sales by double digits through the introduction of Honey to select markets outside of the U.S.