Brown-Forman’s stock slips, although earnings beat expectations

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Shares of Jack Daniel’s parent Brown-Forman Corp. fell 1.3% in premarket trading Wednesday, although the alcohol brands company reported fiscal first-quarter results that beat expectations, although gross margin contracted as price/mix decreased. Net income for the quarter to July 31 rose to $324 million, or 67 cents a share, from $186 million, or 39 cents a share, in the year-ago period. The per-share results include a 19-cent gain from the sale of assets and an 8-cent tax benefit. The FactSet consensus for earnings per share was 30 cents. Sales slipped 2% to $753 million, but was well above the FactSet consensus of $691.2 million. Reported U.S. sales rose 3% and developed international market sales grew 13%, while emerging market sales fell 20%. Jack Daniel’s family of brands sales fell 2%. Company-wide price/mix decreased 19%, reflecting unfavorable portfolio mix with growth in lower-priced brands and unfavorable channel mix resulting from the COVID-19-related restrictions, leading to gross margin contracting to 61.7% from 64.9%. The company did not provide financial guidance given uncertainties related to the COVID-19 pandemic. Brown-Forman’s stock has gained 7.4% year to date through Tuesday, while the S&P 500 has advanced 9.2%.
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