Jack Daniel’s maker Brown-Forman (BF.B) earnings Q1 2024

Jack Daniel’s maker Brown-Forman on Wednesday fell short of Wall Street expectations for its first quarter of fiscal 2024, plagued by lagging whiskey sales, supply challenges and a significant inventory rebuild.

Net sales for whiskey products decreased by 1%, led by the brands Woodford Reserve and Gentleman Jack. Sales for Jack Daniel’s Tennessee Whiskey were flat, the company said, due to lower distributor inventories across the United States.

“As anticipated, our first quarter growth was impacted by the difficult shipment comparison from fiscal 2023, when we rebuilt inventory impacted by prior glass supply challenges,” said Lawson Whiting, CEO of the Kentucky-based wines and spirits company.

Net sales in the U.S. market decreased 8% amid volume declines.

Meanwhile the company saw growth in its ready-to-drink, or RTD, and tequila categories.

Its New Mix RTD beverages delivered strong net sales growth of 52%, while its el Jimador tequila brand saw net sales grow by 27%. The company’s recent acquisition of its Gin Mare and Diplomático brands were also a bright spot.

“We continue to be confident in the strength of our people, our brands, and our business, and reaffirm our full-year fiscal 2024 guidance of 5-7% organic net sales growth and 6-8% organic operating income growth,” Whiting said in a release.

The company reported overall quarterly revenue up 3% year over year and maintained its full-year outlook.

Here’s how Brown-Forman did for the three-month period that ended July 31, compared with what analysts expected, according to consensus estimates from Refinitiv:

• Earnings per share: 48 cents vs. 53 cents expected
• Revenue: $1.04 billion vs. $1.05 billion expected

Net income for the period was $231 million, or 48 cents per share, down 7% from the prior-year period, when the company reported net income of $249 million, or 52 cents per share.

Marketing and operating costs soared during the quarter, outpacing revenue growth and weighing on profits.

Reported advertising expense grew 19%, driven by the launch of its Jack Daniel’s & Coca-Cola RTD item, increased investment in Jack Daniel’s Tennessee Whiskey, and acquisitions.

— CNBC’s Robert Hum contributed to this report.