Brown-Forman Corp. reported a 3 percent rise in its second-quarter profit Tuesday on the strength of brisk sales for its flagship Jack Daniel's whiskey lineup. It also raised its outlook for the year.
Sales are surging for Brown-Forman's ready-to-drink products _ premixed cocktails typically offered in single-serving containers. Their popularity is an indication that many consumers are choosing to drink at home rather than at bars and restaurants.
"We continue to benefit significantly from our investment in ready-to-drink products," Don Berg, Brown-Forman's chief financial officer, said Tuesday in a conference call with industry analysts.
The company also said some consumers are choosing less expensive drinks _ another sign of a struggling economy. But Berg said the company remains upbeat about its premium brands, noting favorable sales gains for some premium brands in the quarter.
Brown-Forman reported a double-digit cut in advertising expenses for the second quarter and benefited from other belt-tightening measures, including a work force reduction announced earlier in the year. But the company has pumped money into new packaging and labeling for some brands aimed at enticing more customers. Company executives also forecast stepped up advertising, especially during the crucial holiday period.
Brown-Forman has "weathered the past 12 months very well," CEO Paul Varga said.
Its Class B shares fell 11 cents to $52.12 at the close of trading Tuesday after setting a 52-week high of $55.47 earlier in the session.
The company, based in Louisville, said case sales trends for many of its key brands improved slightly in the second quarter versus the first quarter. But overall net sales slipped 4 percent from a year ago amid weaker sales of Finlandia vodka and Southern Comfort.
The company earned $147.3 million, or 99 cents per share, for the three months ended Oct. 31, up from $143.2 million, or 94 cents per share, a year ago.
Net sales fell to $892.9 million from $934.7 million a year ago.
Analysts polled by Thomson Reuters had expected a profit of 84 cents per share on revenue of $883.7 million.
For the first six months of the year, the company said profit rose 16 percent to $268.6 million as net sales fell 5 percent to $1.6 billion from the same period a year ago.
The company raised its earnings outlook for the full fiscal year to $2.95 to $3.15 per share, up from prior guidance of $2.60 to $3 per share. Analysts predict $2.87 per share.
Berg told industry analysts that the higher earnings projection reflects its better-than-expected six-month sales performance, expense management and "our confidence about our ability to operate effectively in what remains a competitive and uncertain environment."
UBS analyst Kaumil S. Gajrawala said Tuesday that the company benefited from strong showings for the Jack Daniel's ready-to-drink products, its el Jimador tequila brand and in its international markets.
Nonetheless, he said that "we remain cautious on the remainder of the calendar year."
U.S. case sales for Jack Daniel's Tennessee Whiskey declined 1 percent in the second quarter and first six months of the fiscal year.
But global case sales for the Jack Daniel's lineup rose 12 percent for the six months, led by a 50 percent surge in Jack Daniel's ready-to-drink products.
Finlandia case sales fell 4 percent globally in the first half, hurt by soft sales trends in its key Eastern Europe market and in higher-margin flavored vodkas.
Southern Comfort's global case sales fell 8 percent, hurt by weak sales at bars and restaurants. But Southern Comfort ready-to-drink products surged by 52 percent.
Case sales rose 7 percent for the el Jimador tequila brand during the six months, while Korbel Champagne slipped 1 percent. Case sales for its other super-premium brands _ including Chambord, Herradura, Bonterra and Sonoma-Cutrer _ fell 5 percent in the six months.
AP Business Writer Mae Anderson in New York contributed to this report.