Brown-Forman (BF.B) Q2 Earnings In Line, Stock Dips on View Cut

About this update from Fomento Economico Mexicano Sab De Cv Units Cons. Of 5 Shsb

Brown-Forman Corporation (BF.B) has reported mixed second-quarter fiscal 2024 results, wherein sales missed the Zacks Consensus Estimate, while earnings meet the same. Meanwhile, sales and earnings improved year over year.In the fiscal second quarter, earnings per share (EPS) of 50 cents rose 6% year over year and were in line with the Zacks Consensus Estimate.Net sales of $1,107 million missed the Zacks Consensus Estimate of $1,156 million. The top line increased 1% year over year on a reported basis. On an organic basis, net sales were down 1% from the prior-year level.Shares of Brown-Forman declined 6.9% in the pre-market trading session on Dec 6, owing to the soft top-line performance and a lowered view for fiscal 2024. The Zacks Rank #4 (Sell) company’s shares have lost 6.1% in the past three months compared with the industry’s decline of 3.3%. Q2 in DetailIn second-quarter fiscal 2024, Brown-Forman’s gross profit of $671 million increased 9% year over year on both reported and organic basis. The gross margin expanded 460 basis points (bps) to 60.6%. The gross margin was aided by an improved price/mix, lapping higher costs related to the supply-chain disruptions in the year-ago quarter and lower tariff-related expenses. This was partly negated by higher input costs and adverse currency rates.SG&A expenses of $192 million rose 7% year over year and 6% on an organic basis. The increase stemmed from higher compensation and benefit-related expenses. Advertising expenses increased 16% year over year to $140 million for the fiscal second quarter. On an organic basis, advertising expenses increased 10%. Elevated advertising costs mainly resulted from the launch of Jack Daniel’s and Coca-Cola RTDs, increased investments in Jack Daniel’s Tennessee Whiskey, and the acquisition of Gin Mare and Diplomatico.We expected total operating expenses to increase 11.3% year over year to $333.8 million in the fiscal second quarter, driven by a 2.9% rise in advertising expenses, and an 11.6% increase in selling, general and administrative expenses.Brown-Forman Corporation Price, Consensus and EPS SurpriseBrown-Forman Corporation price-consensus-eps-surprise-chart | Brown-Forman Corporation QuoteThe operating income improved 8% year over year to $339 million on a reported basis due to an improved gross margin, offset by operating expense growth. The organic operating income...

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