Brown-Forman B 2025 Q4 Earnings Misses Targets as Net Income Declines 45%

Brown-Forman B (BF.B) reported its fiscal 2025 Q4 earnings on Jun 05th, 2025. The company experienced a significant earnings miss, with earnings per share (EPS) of 31 cents compared to analysts' expectations of 34 cents. Revenue also fell short, totaling $894 million against the estimated $967.4 million. The guidance for fiscal 2026 indicates a low single-digit decline in organic net sales and operating income. Brown-Forman B's strategic focus remains on long-term growth amidst ongoing market volatility, with efforts to improve distribution, cost structure, and product innovation.

Revenue

The total revenue of Brown-Forman B decreased by 7.3% to $894 million in 2025 Q4, down from $964 million in 2024 Q4.

Earnings/Net Income

Brown-Forman B's EPS declined 44.6% to $0.31 in 2025 Q4 from $0.56 in 2024 Q4. Meanwhile, the company's net income declined to $146 million in 2025 Q4, down 45.1% from $266 million reported in 2024 Q4. EPS underperformed expectations, indicating a challenging quarter.

Price Action

The stock price of Brown-Forman B has edged down 0.87% during the latest trading day, has plummeted 20.06% during the most recent full trading week, and has plummeted 20.78% month-to-date.

Post-Earnings Price Action Review

The strategy of buying BF.B when revenues beat expectations and holding for 30 days resulted in poor performance. This approach yielded a return of -47.50%, significantly underperforming the benchmark return of 78.25%. The excess return was -125.75%, and the compound annual growth rate (CAGR) was -12.16%, indicating substantial losses over the backtested period. Additionally, the strategy experienced a high maximum drawdown of -58.68% and a Sharpe ratio of -0.49, suggesting significant risk and negative returns. These results highlight the challenges faced when attempting to capitalize on earnings surprises in the context of volatile market conditions.

CEO Commentary

Lawson E. Whiting, CEO, President & Director, noted that Brown-Forman navigated a challenging operating environment by focusing on long-term strategies and improving routes to consumers. He highlighted fiscal 2025's 5% decrease in reported net sales but pointed to organic net sales growth of 1% as a sign of resilience. Woodford Reserve was a key growth driver, achieving an 8% increase in organic net sales. Whiting emphasized innovation and brand engagement, particularly with Jack Daniel's and New Mix, while acknowledging workforce changes aimed at delivering $70 million to $80 million in savings. His tone was cautiously optimistic, identifying both challenges and opportunities for growth.

Guidance

Brown-Forman expects a low single-digit decline in organic net sales for fiscal 2026, with anticipated operating income declining in the low single-digit range. The company forecasts capital expenditures between $125 million and $135 million and projects an effective tax rate of approximately 21% to 23%. Whiting noted ongoing volatility due to geopolitical uncertainties and consumer behavior, particularly regarding trade inventories and tariffs, which remain challenging. The guidance recognizes potential short-term disruptions from distributor transitions while maintaining a focus on long-term growth strategies.

Additional News

In recent weeks, Brown-Forman has been at the center of significant industry discussions. The company experienced a notable impact on its stock value following its earnings miss and subsequent warnings about tariff uncertainties. Tariffs have been a critical issue for the company, as indicated by recent reports on the potential impact of a 50% tariff on U.S. whiskey sold in the EU. This has led to strategic shifts in the company's operations, including changes in distribution strategies and focus on innovation to mitigate risks. Additionally, Brown-Forman announced a series of workforce restructuring initiatives aimed at achieving substantial cost savings and enhancing operational efficiency. These moves reflect the company's proactive approach to navigating a challenging macroeconomic and geopolitical landscape.