Brown-Forman Corp., producer of such products as Jack Daniel's, Southern Comfort, and Finlandia Vodka, said this morning 2007 FQ3 profits fell 13%, its first profit drop in six quarters, even as sales were up 20%. Net income was $105 million, down from $120.5 million in FQ3 2006, while sales rose to $755m from $627m. EPS was down to $0.85 from $0.98 a year earlier. Excluding some costs, EPS were $0.89, beating a Bloomberg analyst survey consensus of $0.83. Timothy Ramey of Davidson & Co. said the profit drop is due to dilution as a result of its January $776m purchase of Mexican tequila brands from Grupo Industrial Herradura SA and overseas counterfeiting. The company said it faces softness in Jack Daniel's demand as consumers cut back on alcohol spending or switch to cheaper brands.
Sources: Press Release, MarketWatch, Bloomberg
Commentary: Brown-Forman Should Keep Investors in Good Spirits - Barron's • Diageo Looks Good Enough to Drink
Stocks/ETFs to watch: Brown-Forman (BF.B). Competitors: Constellation Brands Inc. (STZ), Diageo plc (DEO), Fortune Brands Inc. (FO). ETFs: Consumer Discretionary SPDR ETF (XLY), PowerShares Dynamic Consumer Discretionary (PEZ), Vanguard Consumer Discretionary VIPERs (VCR)
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