Brown-Forman Corp.'s third-quarter net income rose 18 percent, mixing strong sales in the U.S. and abroad as the liquor producer reported another round of robust demand for its flagship Jack Daniel's brand and its higher-priced premium brands.The company on Wednesday reported an 8 percent gain in underlying sales in the quarter, matching the performance in the prior six months and reflecting continued strong demand following recent prices increases for many of the company's premium brands. Net sales rose 7 percent in the quarter.
The company said improving U.S. consumer confidence was reflected broadly in sales at restaurants, bars and liquor stores.
"Given the momentum ... for the North American whiskey category, emerging markets and premium-priced spirits generally, we believe Brown-Forman is positioned well for continued strong growth," said its CEO, Paul Varga.
Brown-Forman had solid sales during the crucial holiday period, said Chief Financial Officer Don Berg. The company was pleased with consumer reaction to its price hikes, and it "is evaluating future price increases on a market-by-market basis," he said.
The Louisville-based company said it expects high single-digit net sales growth for the full fiscal year despite a fragile global economy.
The company also bolstered its advertising spending in the first nine months of its fiscal year to promote its brands. It predicted another uptick in the fourth quarter.
Net sales for its lucrative Jack Daniel's brand rose 10 percent when excluding currency swings for the nine-month period.
Jack Daniel's Tennessee Honey was the pacesetter, nearly doubling its global net sales from last year, the company said.
Brown-Forman said the product has had double-digit sales growth in the U.S., and it has expanded to select international markets such as the United Kingdom, a key overseas market where its sales have been strong. The honey-laced product is part of an industry trend toward infusing new flavors into spirits to attract customers.
"We believe global growth opportunities remain for Tennessee Honey as the rollout continues and awareness builds," Berg said during a conference call with industry analysts.
Meanwhile, net sales for its super-premium brands rose 14 percent, adjusted for currency fluctuations, in the nine-month period, the company said. Those brands include Herradura, Woodford Reserve, Sonoma-Cutrer and Chambord liqueur.
Overall, the company reported net income of $157.6 million, or 73 cents per share, for the three months ended Jan. 31, up 18 percent from a year ago. Quarterly net sales rose to just over $1 billion. Analysts surveyed by FactSet expected earnings of 70 cents on net sales of $979.5 million.
The company narrowed its full-year earnings outlook to a range of $2.60 to $2.68 per share from $2.58 to $2.70 per share.
It said its sales were especially strong in emerging markets led by Turkey and Russia, where combined net sales grew more than 35 percent in the nine-month period. Double-digit sales growth also occurred in Brazil and Mexico.
Net sales rose in the mid-teens in Germany and in the mid-single digits in Australia and the United Kingdom.
In the U.S., the company posted 6 percent underlying sales growth in the nine months, due partly to strong demand for North American whiskeys and Jack Daniel's Tennessee Honey.
Net sales for the company's el Jimador tequila brand rose 7 percent on a constant-currency basis in the nine months, while its Finlandia vodka brand had a 5 percent gain.
Sales for the Southern Comfort brand were down 4 percent globally, due to soft demand in Australia, Germany and South Africa, the company said.
The brand's sales grew in the U.S. and returned to growth in the third quarter in the United Kingdom, thanks to the launch of a new marketing campaign. The company plans to expand the ad campaign to other key overseas markets, Berg said.
Sales for Korbel Champagne were up 4 percent in the nine months, while Canadian Mist sales slipped 1 percent.
