Brown-Forman Reports First Quarter Fiscal 2026 Results; Reaffirms Full Year Outlook

LOUISVILLE, Ky.–(BUSINESS WIRE)–Brown-Forman Corporation (NYSE: BFA, BFB) reported financial results for its first quarter of fiscal 2026, ended July 31, 2025, with net sales decreasing 3%¹ to $924 million (+1% on an organic basis²) compared to the same prior-year period. Operating income decreased 7% to $260 million (+2% on an organic basis) and diluted earnings per share decreased 13% to $0.36.

“Our solid first-quarter performance reflects the decisive actions we’ve taken to strengthen our business in a challenging environment,” said Lawson Whiting, Brown-Forman’s President and Chief Executive Officer. “Superior innovation and bold route-to-consumer strategies, in particular, have positioned us to deliver resilient results in the face of persistent headwinds. We are pleased to reaffirm our full-year outlook and remain confident in our ability to create long-term value for shareholders.”

First Quarter of Fiscal 2026 Highlights

• Net sales decline was largely driven by the absence of the prior-year transition services agreement (TSA) related to Sonoma-Cutrer.
• From a geographic perspective, net sales growth in Emerging³ markets and the Travel Retail³ channel was more than offset by declines in the United States and Developed International³ markets.
• Gross margin expanded 40 basis points driven by the positive effect of the divestitures, partially offset by higher costs, unfavorable price/mix, and the negative effect of foreign exchange.
• Operating income declined 7% primarily driven by unfavorable foreign exchange.

First Quarter of Fiscal 2026 Brand Results

• Net sales for Whiskey³ products were flat (flat organic) due to strong initial shipments of Jack Daniel’s Tennessee Blackberry in preparation for the launch and growth of Jack Daniel’s Tennessee Apple in Brazil. This was offset by lower volumes of Jack Daniel’s Tennessee Whiskey in the United States and Germany.
• Net sales for the Tequila³ portfolio declined 1% (+1% organic). Herradura’s net sales declined 16% (-15% organic) driven by lower volumes in the United States as the tequila category remains competitive. el Jimador’s net sales increased 14% (+16% organic) driven by higher volumes in the United States due to the roll-out of the new bottle design, inventory build ahead of the distributor transitions in 13 states, and new innovation launch of the Cristalino expression.
• Net sales for the Ready-to-Drink³ (RTD) portfolio increased 6% (+9% organic). Net sales of New Mix increased 26% (+36% organic) fueled by market share gains in a growing category, partially offset by the negative effect of foreign exchange. Jack Daniel’s RTD/RTP portfolio declined 2% (-1% organic) as declines in Canada more than offset growth in the United States.
• Rest of Portfolio’s³ net sales declined 27% (+17% organic) driven by the absence of the Sonoma-Cutrer and Finlandia prior-year TSAs and the conclusion of the Korbel Champagne Cellars relationship (Korbel relationship). The decline was partially offset by the distribution of new agency brands in Japan and Mexico, along with growth of Gin Mare in Italy.
• Net sales for non-branded and bulk decreased 44% driven by lower used barrel sales.

First Quarter of Fiscal 2026 Market Results

• Net sales in the United States decreased 8% (-2% organic) driven by the absence of the Sonoma-Cutrer prior-year TSA, lower volumes of Jack Daniel’s Tennessee Whiskey and Herradura, and the end of Korbel relationship. The declines were partially offset by strong initial shipments for the upcoming launch of Jack Daniel’s Tennessee Blackberry and in preparation for the August 1, 2025 distributor transitions in the United States.
• Net sales in the Developed International markets declined 8% (-9% organic) due to soft consumer demand impacted by macroeconomic and geopolitical uncertainty. The decline was led by lower volumes of Jack Daniel’s Tennessee Whiskey in Germany and the United Kingdom, along with the absence of American-made alcohol from retail shelves in most of the Canadian provinces. The decline was partially offset by the positive effect of foreign exchange and the benefit from the transition to owned distribution in Italy.
• Net sales in Emerging markets increased 20% (+25% organic) driven by higher volumes across the Jack Daniel’s family of brands, which were led by Brazil and Türkiye and partially benefitted from an increase in distributor inventories. The double digit growth of New Mix also contributed to this increase, partially offset by the negative effect of foreign exchange.
• The Travel Retail channel’s net sales increased 8% (+7% organic) due to higher volumes of Jack Daniel’s Tennessee Whiskey and Gin Mare, partially due to the timing of shipments, as well as the positive effect of foreign exchange.

First Quarter of Fiscal 2026 Other P&L Items

• Gross profit decreased 2% (-2% organic). Gross margin expanded 40 basis points to 59.8% driven by the positive effect of acquisitions and divestitures, partially offset by higher costs, unfavorable price/mix, and the negative effect of foreign exchange.
• Advertising expense decreased 4% (-3% organic) led by lower Jack Daniel’s Tennessee Whiskey spend and the absence of the Korbel brands, as we thoughtfully manage our controllable expenses while maintaining healthy levels of brand investment.
• Selling, general, and administrative (SG&A) expenses decreased 6% (-7% organic) driven by lower compensation-and-benefit-related expenses.
• The company incurred $12 million in charges related to the strategic restructuring initiative announced in January 2025.
• Operating income declined 7% (+2% organic) with an operating margin decrease of 140 basis points to 28.2%. The decrease was primarily driven by the negative effect of foreign exchange, the absence of the prior-year franchise tax refund, and the impact of the restructuring initiative. These declines were partially offset by the benefit of the substitution drawback claims².
• The company recognized a non-operating pension settlement charge of $19 million, largely related to the early retirement benefit offered in fiscal 2025.
• Diluted earnings per share decreased $0.05 driven by the decrease in operating income and an increase in non-operating postretirement expense.

First Quarter of Fiscal 2026 Financial Stewardship

On July 24, 2025, the Brown-Forman Board of Directors declared a regular quarterly cash dividend of $0.2265 per share on its Class A and Class B common stock. The dividend is payable on October 1, 2025, to stockholders of record on September 3, 2025. Brown-Forman, a member of the S&P 500 Dividend Aristocrats Index, has paid regular quarterly cash dividends for 81 consecutive years and has increased the regular dividend for 41 consecutive years.

Fiscal 2026 Outlook

We continue to anticipate the operating environment for fiscal 2026 to be challenging, with low visibility due to macroeconomic and geopolitical volatility as we face headwinds from consumer uncertainty, the potential impact from currently unknown tariffs, and lower non-branded sales of used barrels. We remain focused on building our business for the long term and navigating the current environment at pace with strategic initiatives in fiscal 2026 that we believe will unlock future growth led by the significant evolution of our U.S. distribution, the restructuring initiative, and meaningful new product innovation.

Accordingly, we reiterate the following expectation for fiscal 2026:

• Organic net sales decline in the low-single digit range.
• Organic operating income decline in the low-single digit range.
• Our effective tax rate to be in the range of approximately 21% to 23%.
• Capital expenditures planned to be in the range of $125 to $135 million.

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 is a global leader in the spirits industry, responsibly building exceptional beverage alcohol brands for more than 155 years. Headquartered in Louisville, Kentucky, we are guided by our founding promise, “Nothing Better in the Market.” Our premium portfolio includes the Jack Daniel’s Family of Brands, Woodford Reserve, Old Forester, New Mix, el Jimador, Herradura, The Glendronach, Glenglassaugh, Benriach, Diplomático Rum, Gin Mare, Fords Gin, Chambord, and Slane. With approximately 5,000 employees worldwide, we proudly share our passion for fine-quality spirits in more than 170 countries. Learn more at brown-forman.com and stay connected with us on 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 statement, 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 those expressed in or implied by the forward-looking statements. 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
• Disruption of our distribution network or inventory fluctuations in our products by distributors, wholesalers, or retailers
• Risks from changes to the trade policies, tariffs and import and export regulations of the U.S. or foreign governments and the effectiveness of our actions to mitigate the negative impact on our margins, sales, and/or distributors
• 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
• 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
• 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
• 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
• Impact of health epidemics and pandemics, and the risk of the resulting negative economic impacts and related governmental actions
• 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; 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 due to 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 see the risks and uncertainties described in Part I, Item 1A. Risk Factors of our 2025 Form 10-K, and those described from time to time in our reports on Form 10-Q filed with the SEC.

Contacts

Elizabeth Conway, Director, External Communications

Elizabeth_Conway@b-f.com

Sue Perram, Vice President, Director, Investor Relations

Sue_Perram@b-f.com

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