) came up with mixed results for the first quarter of fiscal 2015,
wherein its top and bottom lines witnessed an year-over-year growth
but fell shy of the Zacks Consensus Estimate.
The company's earnings of 70 cents per share for the quarter
were nearly 6.1% higher than the year-ago quarter but fell short of
the Zacks Consensus Estimate of 73 cents. Brown-Forman has blamed
lower-than-expected sales for the earnings miss.
Net sales for the fourth quarter increased 3% year over year to
$921 million. Moreover, after deducting excise taxes, sales came in
at $705 million, up 2.8% from the prior-year figure of $686
million. The Zacks Consensus Estimate for the quarter was $703
The company revealed that the sales growth for the quarter were
lower than the year-ago period. The first quarter of fiscal 2014
had mainly benefited from the huge inventory build up by
distributors and retailers due to price increase.
Quarter in Detail
In the quarter, Brown-Forman's gross profit increased 4% to $495
million from $477 million in the year-ago comparable quarter,
primarily due to lower cost of sales. Consequently, gross margin
improved 40 basis points (bps) to 53.7%.
Selling, general and administrative expenses (SG&A)
increased 9% from the year-ago quarter to $170 million while
advertising expenses decreased 4% year over year to $99
Operating profit marginally improved year over year to $214
million from $211 million in the prior-year period. However,
operating margin contracted 30 bps to 23.9% from 24.2% in the
year-ago quarter as the benefit from improved gross margin was more
than offset by higher operating expenses as a percentage of net
Balance Sheet & Cash Flow
Brown-Forman ended the quarter with cash and cash equivalents of
$460 million and long-term debt of $998 million. During first
quarter, Brown-Forman generated $112 million of cash from
operations, against $93 million in the previous quarter. During the
quarter, the company returned $74 million to shareholders through
dividend payments of $62 million and share repurchase worth $12
Reaffirms Fiscal 2015 Guidance
Though Brown-Forman started fiscal 2015 on a soft note, the
company remains optimistic about the rest of the fiscal 2015.
Therefore, it has reaffirmed its fiscal guidance range of 6% to 8%
growth in underlying as well as reported sales.
Moreover, operating income is still expected to increase in the
band of 9% to 11% on an underlying as well as reported basis. The
company also continues to project earnings in the band of $3.25 to
$3.45 per share for fiscal 2015. Currently, the Zacks Consensus
Estimate for Brown-Forman stands at $3.36 per share.
Other Stocks to Consider
Currently, Brown-Forman carries a Zacks Rank #3 (Hold). Some
better-placed stocks in the beverages-alcohol industry are
Anheuser-Busch InBev SA/NV (
), Constellation Brands Inc. (
) and Molson Coors Brewing Co. (
), all carrying a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
BROWN FORMAN B (BF.B): Free Stock Analysis
CONSTELLATN BRD (STZ): Free Stock Analysis
MOLSON COORS-B (TAP): Free Stock Analysis
ANHEUSER-BU ADR (BUD): Free Stock Analysis
To read this article on Zacks.com click here.