Brown-Forman Reports Financial Results

Brown-Forman Corporation (NYSE: BFA, BFB) reported financial results for its second quarter and first half of fiscal 2026, ended October 31, 2025. Second quarter reported net sales decreased 5% to $1.0 billion (-2% on an organic basis²) compared to the same prior-year period. In the quarter, reported operating income decreased 10% to $305 million (-9% on an organic basis) and diluted earnings per share decreased 14% to $0.47.

For the first six months of the fiscal year, the company’s reported net sales decreased 4% to $2.0 billion (flat on an organic basis) compared to the same prior-year period. First half reported operating income decreased 9% to $565 million (-4% on an organic basis) and diluted earnings per share decreased 13% to $0.83.

“Our second quarter results reflect a continuation of the themes we saw in the first quarter, and the first half of the year unfolded largely as we expected,” Lawson Whiting, Brown-Forman’s President and Chief Executive Officer said in a news release. “While the operating environment continues to be challenging, our team remains resilient and focused on executing our plans. Based on this performance and our visibility into the remainder of the year, we are pleased to reaffirm our fiscal year guidance.”

First Half of Fiscal 2026 Highlights

Net sales decline largely driven by the end of the Korbel Champagne Cellars relationship (Korbel relationship) and the absence of the Sonoma-Cutrer prior-year transition services agreement (TSA).
From a geographic perspective, net sales growth in Emerging markets and the Travel Retail channel was more than offset by declines in the United States and Developed International markets.
Gross margin expanded 30 basis points driven by the positive effect of acquisitions and divestitures, partially offset by higher costs and unfavorable price/mix.
The Brown-Forman Board of Directors authorized a $400 million share repurchase program and increased the quarterly cash dividend for the 42nd consecutive year.
Cash flows from operations grew by $163 million to $292 million and free cash flow increased by $179 million to $236 million.

First Half of Fiscal 2026 Brand Results

Net sales for Whiskey products were flat (flat organic). The launch of Jack Daniel’s Tennessee Blackberry and higher net sales of Woodford Reserve, driven by distributor inventories and transitions in the United States, were offset by lower volumes of Jack Daniel’s Tennessee Whiskey and Jack Daniel’s Tennessee Honey.
Net sales for the Tequila portfolio declined 3% (-3% organic). Herradura’s net sales declined 11% (-11% organic) led by lower volumes in the United States as the tequila category remains competitive. el Jimador’s net sales increased 1% (+2% organic) driven by higher volumes in Colombia and an estimated net increase in distributor inventories in the United States.
Net sales for the Ready-to-Drink (RTD) portfolio increased 5% (+5% organic). Net sales of New Mix increased 28% (+30% organic) fueled by growth in Mexico with market share gains in an accelerating category. Jack Daniel’s RTD/RTP portfolio declined 4% (-4% organic) largely due to the absence of American-made beverage alcohol from retail shelves across most provinces in Canada.
Rest of Portfolio’s net sales declined 35% (+22% organic) driven by the conclusion of the Korbel relationship and the absence of the Sonoma-Cutrer and Finlandia prior-year TSAs. The decline was partially offset by the distribution of new agency brands in Japan and Mexico, along with broad-based growth of Gin Mare.
Net sales for non-branded and bulk decreased 61% driven by lower used barrel sales.

First Half of Fiscal 2026 Market Results

Net sales in the United States decreased 9% (flat organic) driven by the end of the Korbel relationship and the absence of the Sonoma-Cutrer prior-year TSA, as well as lower volumes of Jack Daniel’s Tennessee Whiskey, Herradura, and Jack Daniel’s Tennessee Honey. These declines were partially offset by the launch of Jack Daniel’s Tennessee Blackberry and higher net sales across the portfolio as a result of changes to our distributor relationship terms.
In a challenging economic environment, net sales in the Developed International markets declined 4% (-6% organic), though improved sequentially. The decline was driven by the absence of American- made beverage alcohol from retail shelves in most of the Canadian provinces and lower volumes of Jack Daniel’s Tennessee Whiskey in Germany and the United Kingdom. The decline was partially offset by the positive effect of foreign exchange, new agency brands in Japan, and the benefit from transition to owned distribution in Italy.
Net sales in Emerging markets increased 10% (+12% organic) led by strong double digit growth of New Mix, higher volumes across the Jack Daniel’s family of brands in Brazil and Türkiye, and an estimated net increase in distributor inventories.
The Travel Retail channel’s net sales increased 7% (+6% organic) due to higher volumes of Jack Daniel’s Tennessee Whiskey, the phasing of ordering patterns, and the positive effect of foreign exchange.

First Half of Fiscal 2026 Other P&L Items

Gross profit decreased 4% (-3% organic). Gross margin expanded 30 basis points to 59.5% driven by the positive effect of acquisitions and divestitures, partially offset by higher costs and unfavorable price/mix.
Advertising expense decreased 2% (-1% organic) as a more focused investment for the new “That’s What Makes Jack, JACK” global campaign, the launch of Jack Daniel’s Tennessee Blackberry, and the negative effect of foreign exchange was more than offset by lower spend across the rest of our portfolio and the absence of the Korbel brands.
Selling, general, and administrative (SG&A) expenses decreased 3% (-4% organic) largely driven by lower compensation-and-benefit-related expenses.
The company incurred $16 million in charges related to the strategic restructuring initiative announced in January 2025.
Operating income declined 9% (-4% organic) with an operating margin decrease of 150 basis points to 28.9%. The operating margin decrease was primarily driven by the decline in gross profit, the impact of the restructuring initiative, and the absence of the prior-year franchise tax refund. These declines were partially offset by the benefit of the substitution drawback claims.
The company recognized a non-operating pension settlement charge of $22 million, largely related to the early retirement benefit offered in fiscal 2025.
Diluted earnings per share decreased $0.13 driven by the decrease in operating income and an increase in non-operating postretirement expense.

First Half of Fiscal 2026 Financial Stewardship

On November 19, 2025, the Brown-Forman Board of Directors approved an increase of 2% to the quarterly cash dividend from $0.2265 per share to $0.2310 per share on its Class A and Class B Common Stock. The dividend is payable on January 2, 2026, to stockholders of record on December 5, 2025. Brown-Forman, a member of the S&P 500 Dividend Aristocrats Index, has paid regular quarterly cash dividends for 82 consecutive years and has increased the regular dividend for 42 consecutive years.

As announced on October 2, 2025, the Brown-Forman Board of Directors authorized the repurchase of $400 million (exclusive of brokerage fees and excise taxes) of outstanding shares of Class A and Class B common stock from October 1, 2025, through October 1, 2026, subject to market and other conditions. As of October 31, 2025, $301 million remained available under the program.

In addition, cash flows from operations grew $163 million to $292 million, primarily reflecting disciplined working capital management. Free cash flow increased $179 million to $236 million, reflecting strong operating cash flow generation and lower capital expenditure needs.

Fiscal 2026 Outlook

Brown-Forman said it continues to anticipate the operating environment for fiscal 2026 to be challenging, with low visibility due to macroeconomic and geopolitical volatility as it faces headwinds from consumer uncertainty and lower non-branded sales of used barrels. The company said it remains focused on building its business for the long term and navigating the current environment at pace with strategic initiatives in fiscal 2026 that it believes will unlock future growth led by the significant evolution of U.S. distribution, the restructuring initiative, and meaningful new product innovation.

Accordingly, Brown-Forman reiterated the following expectation for fiscal 2026: