Brown-Forman Corp., Louisville, Ky., reported financial results for the first quarter of its 2015 fiscal year, which ended July 31, 2014. The company grew reported net sales 3 percent to $921 million. Net sales growth was impacted by the difficult comparison with the prior-year period when sales benefited from significant distributor and retail buy-ins, related primarily to price increases, the company says.

Reported operating income increased 1 percent to $221 million, and diluted earnings per share increased 5 percent to $0.70 compared with $0.66 in the prior-year period.

“As anticipated, our first-quarter growth came in lower than what we achieved during fiscal 2014 and our expectations for fiscal 2015, due largely to pricing decisions that resulted in distributor and retail inventory reductions in the United States and Europe,” said Paul Varga, chief executive officer of Brown-Forman, in a statement. “We anticipate higher rates of sales growth over the balance of the year, led by Jack Daniel’s and our portfolio of premium whiskey brands. We reaffirm our full-year guidance and our expectations of 9-11 percent underlying operating income growth in fiscal 2015.”

The company’s underlying net sales growth was led by the Jack Daniel’s trademark, which was up 5 percent. Jack Daniel’s Tennessee Honey grew underlying sales by 29 percent, powered by large gains in new markets outside of the United States. Markets that were launched in prior years, including the United States, continued to grow in the quarter driven by the combination of price and volume growth.

Brown-Forman’s portfolio of super- and ultra-premium whiskey brands, including Woodford Reserve, Woodford Reserve Double Oaked, Jack Daniel’s Single Barrel, Gentleman Jack, Sinatra Select, No. 27 Gold and Collingwood, collectively grew underlying net sales by double-digits. Old Forester also grew underlying net sales double-digits, and the Woodford Reserve brand family grew underlying net sales 29 percent.

El Jimador and Herradura grew underlying net sales by 15 and 20 percent, respectively, with double-digit gains in both the United States and Mexico. Results in Mexico benefited from favorable comparisons versus the prior-year period of inventory reductions following price increases taken in that market, the company notes.
On the other end of the spectrum, the Finlandia vodka brand family experienced a 13 percent decline in underlying net sales primarily because of weakness in Poland, where the combination of a reduction in trade and retail inventory levels and challenging economic conditions negatively impacted results, the company explains. Likewise, Southern Comfort and some other premium liqueur brands continued to decline, driven by continued pressure from flavored whiskies as well as weakness in the on-premise channel. The Southern Comfort brand family experienced a 7 percent decline in underlying net sales.

Presuming no deterioration in current global market conditions, the company is reaffirming its growth outlook for fiscal-year 2015, including 6-8 percent growth in reported and underlying net sales, and 9-11 percent growth in reported and underlying operating income. Although first-quarter results were negatively impacted by inventory reductions, the company expects stronger reported and underlying results during the balance of the year, driven by more stable inventory levels and expanding global demand for the company’s portfolio of brands, it says. The company also expects diluted earnings per share of $3.25 to $3.45, which now incorporates an anticipated negative impact from foreign exchange of $0.06 per share, partially offset by a lower expected tax rate of 29.5 percent.