Brown-Forman Corp , the parent of Jack Daniel’s whiskey, Old Foster and other popular brands, saw its stock drop Thursday after it reported a weaker-than-expected fourth-quarter fiscal 2025.

The spirits maker posted quarterly net sales of $894 million, down 7% from a year ago and 3% lower on an organic basis. The figure missed analyst expectations of $967.39 million.

Diluted earnings per share fell 45% to 31 cents, missing the consensus estimate of 34 cents. The company attributed the profit decline primarily to the absence of a prior-year gain from the sale of its Sonoma-Cutrer wine business.

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Gross margin declined 9.8% year over year to $513 million, with the margin shrinking 164 basis points to 57.4%. Operating income dropped 45.3% to $205 million, and operating margin decreased by 1,597 basis points to 22.9%.

For the full fiscal year, net sales declined 5% to $4.18 billion. Operating income fell 22% to $1.1 billion, and earnings per share slid 14% to $1.84.

Brown-Forman faced a tough fiscal 2025 due to macro and geopolitical pressures, which weighed on consumer confidence and spending.

Volume and Geography

Net sales fell across regions, largely due to Finlandia and Sonoma-Cutrer divestitures. Gross profit dropped 7%, and gross margin shrank 150 basis points on higher costs and FX pressure. Operating expenses declined 10%.

The overall whiskey volume shipments dropped 3% year over year in the quarter, Tequila volume fell 11% due to divestiture, and the rest of the portfolio volume dropped 6%.

In terms of geography, the United States reported a net revenue decline of 7% year-over-year, Germany reported a 4% decline, the United Kingdom fell 6%, and the most noteworthy decline of 14% came from Canada. Emerging markets revenue dropped 2%.

The company booked $63 million in restructuring charges and returned $420 million to shareholders. It also received $350 million from its Duckhorn stake sale and repaid $300 million in debt.

For fiscal 2025, whiskey sales were flat, with 1% organic growth. Tequila declined 14% on weak demand in Mexico, and the U.S. Ready-to-drink sales fell 6% but rose 5% organically. Portfolio sales dropped 33%, driven by divestitures.

The company received $350 million from the sale of its Duckhorn stake, recording a $78 million pretax gain. The company also repaid $300 million in senior notes at maturity.

Outlook

Brown-Forman expects a tough operating landscape in fiscal 2026 amid macroeconomic uncertainty, potential new tariffs, and softer non-branded barrel sales.

The company projects low-single-digit declines in both organic net sales and operating income, with a tax rate between 21% and 23%. Capital spending is forecast between $125 million and $135 million.

Price Action: BF.B shares are trading lower by 15.60% to $28.09 at the last check Thursday.

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