Brown-Forman $BF.B reported full-year net sales of $3.9 billion for fiscal 2026, finishing ahead of its own expectations despite a reported 1% decline from the prior year, with organic net sales flat after stripping out the effects of acquisitions, divestitures, and currency moves.
The company's fourth-quarter net sales reached $912 million, a 2% gain on both a reported and organic basis, clearing the Reuters-compiled analyst consensus of $879.6 million.
For the full year, diluted earnings per share fell 17% to $1.53 as reported operating income declined 10% to $1.0 billion. A 34% jump in selling, general, and administrative expenses to $259 million, combined with $132 million in non-cash intangible asset impairment charges, dragged fourth-quarter earnings down to $0.12 per share — a 62% drop that fell well short of the $0.32 analyst estimate tracked by Reuters.
The full-year net sales decline was driven by the end of the company's Korbel Champagne Cellars distribution relationship and the absence of a prior-year transition services agreement related to the Sonoma-Cutrer wine business, the company said. Those headwinds were partially offset by the launch of Jack Daniel's Tennessee Blackberry. Organic sales in the U.S. were flat for the year, while emerging markets grew 12% organically, led by Türkiye, the United Arab Emirates, and Brazil.
Tequila was a weak spot: Herradura net sales fell 9% for the year, or 10% on an organic basis, and el Jimador net sales declined 2%. The ready-to-drink portfolio was a relative bright spot, with New Mix net sales rising 41%, or 33% organically, on market share gains in Mexico and a U.S. launch.
Cash flows from operations grew $402 million to $1.0 billion for the year, and free cash flow increased $462 million to $893 million. The company returned $827 million to stockholders through dividends and share repurchases.
"We finished the fiscal year ahead of our expectations, driven by strong execution in our innovation portfolio, the early benefits of our U.S. route-to-market transformation, and strategic cost-restructuring initiatives," President and CEO Lawson Whiting said in a statement. "While we expect continued market volatility and a challenging cost cycle in the year ahead, our performance this year proves we have the right people, brands, and strategy to navigate these challenges effectively."
For fiscal 2027, the company said it expects organic net sales to be approximately flat and organic operating income to decline in the 3% to 5% range, citing macroeconomic pressures, geopolitical instability, and continued weakness in consumer spending in developed markets.
By Thursday morning, Reuters reported Brown-Forman shares had gained 3%.