Brown-Forman Corporation reported a 5% decline in second-quarter FY26 net sales to $1.0 billion (-2% organic). Operating income fell 10% to $305 million, while diluted EPS decreased 14% to $0.47.
For the first half, net sales declined 4% to $2.0 billion (flat organic), operating income was down 9% to $565 million, and diluted EPS slipped 13% to $0.83. The company said results were broadly in line with expectations and reaffirmed its full-year guidance despite ongoing market challenges.
Lawson Whiting, Brown‑Forman’s President and Chief Executive Officer shared, “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. 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.”
Performance was weighed down by the end of the Korbel Champagne Cellars relationship, the absence of prior-year Sonoma-Cutrer and Finlandia transition service agreements, and softer volumes for Jack Daniel’s Tennessee Whiskey, Herradura, and Jack Daniel’s Tennessee Honey. Lower used-barrel sales also contributed to the decline.
Growth in Emerging Markets, particularly Mexico’s RTD brand New Mix, and steady gains in Travel Retail helped offset weaknesses in the United States, Canada, Germany, and the UK. Whiskey sales were flat, tequila declined 3%, and the RTD portfolio grew 5%.
Gross margin expanded 30 basis points to 59.5% due to the positive impact of acquisitions and divestitures, though higher costs and unfavourable price/mix partly offset the gains. Operating expenses declined modestly, supported by lower compensation costs and targeted advertising investment.
Operating cash flow increased to $292 million, up $163 million, while free cash flow rose $179 million to $236 million, benefiting from disciplined working-capital management and reduced capital spending needs.
The Board authorised a $400 million share repurchase programme and raised the quarterly dividend by 2% to $0.2310, marking the company’s 42nd consecutive annual increase and its 82nd year of uninterrupted dividend payments.
Brown-Forman reaffirmed its FY26 outlook, expecting low-single-digit declines in organic net sales and operating income, an effective tax rate of 21%–23%, and a lowered capital expenditure estimate of $110–$120 million.