Brown-Forman FY2026: net sales fell 1% to $3.93B (organic flat) and EPS dropped 17% to $1.53 on $132M brand write-downs, deal costs and a missing prior-year Duckhorn gain, while gross margin rose to 60.5%.
Revenue
$3.9B
-1.2% YoY
Net income
$715M
-17.7% YoY
Diluted EPS
$1.53
-16.8% YoY
Operating margin
25.5%
Overview
Brown-Forman, the Louisville-based owner of Jack Daniel's, Woodford Reserve, el Jimador and Herradura, closed fiscal 2026 (the year ended April 30, 2026) with net sales of $3.93 billion, down 1%, and diluted earnings per share of $1.53, down 17%. The sales decline was mostly a portfolio effect: the company stopped selling Korbel champagne and brandy on June 30, 2025, and a prior-year transition arrangement for the already-sold Sonoma-Cutrer wine business fell away. Excluding those brand exits and currency moves, "organic" net sales (the company's measure of the underlying business, which leaves out acquisitions, divestitures and foreign-exchange swings) were flat.
The much larger drop in profit came from below the gross-profit line: $132 million of non-cash write-downs on the Gin Mare and Diplomático brands, higher overhead costs (partly tied to a business-combination discussion that was terminated in April 2026), and the absence of $83 million of income and gain from the company's former stake in The Duckhorn Portfolio, which it sold in fiscal 2025. Gross margin, by contrast, improved.
Key figures
Metric
FY2026
FY2025
YoY Change
Net sales
$3,928M
$3,975M
-1.2%
Organic net sales change
flat
—
0%
Gross margin
60.5%
58.9%
+1.6 pp
Operating income
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pp = percentage points; nm = not meaningful. Source: FY2026 Form 10-K, consolidated statements of operations, MD&A and cash flow summary.
Volume up, price/mix down: what "flat organic sales" hides
The 10-K splits sales growth into how much was sold (volume) and what each case sold for, including the shift between cheaper and pricier products (price/mix). On an organic basis, volume rose 5% while price/mix fell 5%. On a reported basis, volume was up 2% and price/mix down 3%.
The company attributes the volume gain to New Mix (a low-priced canned tequila cocktail sold mainly in Mexico) and the launch of Jack Daniel's Tennessee Blackberry (JDTB), "due in part to a net increase in distributor inventories in the United States." The price/mix drag came from "unfavorable portfolio mix from New Mix and lower sales of used barrels and JDTW" (Jack Daniel's Tennessee Whiskey, the flagship).
Two points matter for reading this:
The growth came from the cheapest part of the portfolio. New Mix grew 41% reported (33% organic), but each case sells for far less than a case of whiskey, so it adds volume while pulling down the average price.
Some of the U.S. volume was stocking, not drinking. Shipments to distributors ran ahead of what those distributors sold on to stores (the company's "estimated net increase in distributor inventories"), helped by the JDTB launch and the switch of distributors in California (May 1, 2025) and 13 more U.S. markets (August 1, 2025). Stock built up in one year tends to be run down in the next, and the Q1 fiscal 2027 results below already show that reversal.
Results by brand family
Brand / category
Reported change
Organic change
Whiskey (total)
+3%
+1%
Jack Daniel's Tennessee Whiskey
-2%
-4%
Jack Daniel's Tennessee Honey
-3%
-5%
Jack Daniel's Tennessee Apple
+12%
+10%
Woodford Reserve
+4%
+4%
Rest of Whiskey (incl. JDTB launch)
+61%
+60%
Ready-to-Drink (total)
+11%
+7%
JD RTD/RTP
-3%
-5%
New Mix
+41%
+33%
Tequila (total)
-4%
-6%
el Jimador
-2%
-2%
Herradura
-9%
-10%
Non-branded and bulk (used barrels etc.)
-68%
-68%
The Jack Daniel's core is shrinking in rich countries. Flagship JDTW sales fell on "lower volumes in the United States and our developed international markets, led by Germany, the United Kingdom, and Canada," partly offset by emerging-market growth led by the UAE and Türkiye. Without the JDTB launch (inside "Rest of Whiskey," +61%), total whiskey would have been weaker.
Tequila is a problem. Herradura fell 9% on lower volumes in the U.S. and Mexico; el Jimador fell 2%, and even that figure was helped by distributor restocking in the U.S.
Ready-to-drink (pre-mixed cans and bottles) grew only because of New Mix; the Jack Daniel's RTD line itself fell 3% on declines in the U.S. and Canada.
Used-barrel sales collapsed 68%, which the company ties to demand and pricing that have "adjusted to levels that reflect the current challenging and uncertain operating environment for our industry" — a sign the wider whiskey industry is cutting production.
Results by geography
Region
Share of FY2026 sales
Reported change
Organic change
United States
42%
-7%
flat
Developed International
28%
flat
-3%
Emerging markets
25%
+14%
+12%
Travel Retail
5%
+6%
+5%
United States (-7% reported, flat organic): the reported drop is almost entirely the Korbel exit and the end of the Sonoma-Cutrer transition arrangement. Underneath, lower volumes of JDTW, tequila and Tennessee Honey were offset by launches, Woodford Reserve growth, "higher net pricing across the portfolio as a result of changes to our distributor relationship terms," and "favorable timing of distributor ordering patterns."
Developed International (-3% organic): Germany (-7% organic), the UK (-9%) and France (-7%) all declined on weaker Jack Daniel's volumes; a weaker dollar made the reported numbers look better. In Canada, the 10-K notes "the continued absence of American-made beverage alcohol from retail shelves in most of its provinces" — the retaliation against U.S. tariffs that began in March 2025.
Emerging markets (+12% organic) were the growth engine: Mexico +20% reported (New Mix), Brazil +13% (Jack Daniel's Apple and the flagship), and "Rest of Emerging" +16%, led by the UAE and the rest of Latin America — though the company says the latter also benefited from "an estimated net increase in distributor inventories."
Margins, tariffs and one-off items
Gross margin — the share of sales left after the cost of making the product — rose 1.6 points to 60.5%. The company's bridge shows most of that (1.3 points) came from dropping the lower-margin Korbel and Sonoma-Cutrer businesses, with small help from currency (+0.2) and lower costs (+0.2); price/mix was a slight drag (-0.1). Lower agave (tequila's raw material) costs helped; higher wood costs and "unfavorable fixed cost absorption related to decreased production of our full-strength portfolio" — i.e., distilleries producing less and spreading fixed costs over fewer cases — hurt.
Tariffs: the 10-K does not put a dollar figure on tariff costs for the year. Its disclosure is qualitative: Canadian provinces pulled American spirits, including Jack Daniel's, in March 2025; certain U.S. tariffs were struck down by the U.S. Supreme Court in February 2026 but new ones followed; and the company warns that if it absorbs tariff costs rather than passing them on, margins would fall.
What drove operating income down 10% (operating margin — the share of sales left after running the business, before interest and tax — fell to 25.5% from 27.9%):
Brand write-downs of $132 million ($45 million Gin Mare, $87 million Diplomático), versus $47 million in fiscal 2025, reflecting "the softening category outlook and challenging macroeconomic environment." The company says both brands are still carried near their fair values, so further write-downs are possible.
SG&A (overhead) up 9%, driven by "costs associated with the contemplated business transaction discussions," higher pay and benefits, and currency. The 10-K discloses the transaction was terminated in April 2026, and in June 2026 the board approved one-time cash awards for executives who worked on it.
A smaller gain from revaluing the Gin Mare earn-out (the contingent payment owed to Gin Mare's sellers): $15 million versus $43 million the year before.
Offsets: restructuring charges fell to $19 million from $60 million (the January 2025 plan cut the workforce by about 12% and closed the Louisville cooperage; it is now substantially complete), advertising spend fell 4%, and an $18 million one-off benefit came from collected U.S. customs refunds ("substitution drawback claims").
On the company's organic basis, which removes impairments, restructuring and other one-off items, operating income fell 2%. EPS fell further (-17%) than operating income because fiscal 2025 included $83 million of equity-method income and gain on the sale of the company's stake in The Duckhorn Portfolio, with nothing comparable in fiscal 2026. Lower interest costs (-15%) and a slightly lower tax rate (19.3% vs. 19.6%) helped a little.
Cash: operating cash flow rose to $1.0 billion from $598 million. The company bought back $400 million of stock and paid $427 million in dividends. Moody's downgraded its credit rating to A2 from A1 in November 2025.
Takeaway: The 17% EPS drop overstates the damage, since it is mostly write-downs, deal costs and a missing prior-year gain. But "flat organic sales" understates it: volume growth came from low-priced New Mix and distributor restocking, while flagship Jack Daniel's and both tequila brands shrank in the U.S. and Europe. Growth that depends on distributors stocking up tends to reverse the next year, and the first quarter of fiscal 2027 shows that starting.
Outlook
Management's fiscal 2027 guidance (unchanged between the 10-K and the Q1 10-Q): organic net sales approximately flat, organic operating income down 3% to 5%, an effective tax rate of about 20%–22%, and capital spending of $60–70 million. The company expects help from the restructuring savings, the U.S. distributor changes (including 11 control states moved on June 1, 2026) and the wider rollout of JDTB. It also took over the U.S. Jack Daniel's Country Cocktails business from Pabst Brewing on July 7, 2026.
Latest quarter — Q1 fiscal 2027 (three months ended July 31, 2026, from the Form 10-Q filed September 2, 2026):
Metric
Q1 FY2027
Q1 FY2026
Change
Net sales
$911M
$924M
-1% (organic -1%)
Gross margin
60.2%
59.8%
+0.4 pp
Operating income
$252M
$260M
-3% (organic +4%)
Net income
$176M
$170M
+3.5%
Diluted EPS
$0.38
$0.36
+6%
The quarter confirms the pattern. U.S. sales fell 3%, partly on "an estimated net decrease in distributor inventories reflecting prior-year distributor transitions" and lower JDTB shipments after last year's launch stocking. Europe weakened sharply (Germany -11%, France -14%, Spain -16%), while Mexico grew 26% on New Mix and Jack Daniel's RTDs. Tequila fell again (el Jimador -10%, Herradura -17%). EPS rose because of a much smaller pension-related expense and fewer shares outstanding after last year's buybacks, not because operating income improved.
Our read: Guidance for flat organic sales and a 3%–5% organic operating income decline looks realistic rather than conservative. The main sources of fiscal 2026 volume — New Mix and U.S. distributor restocking — are either low-priced or one-time, while the higher-priced core (Jack Daniel's whiskey in the U.S. and Europe, and tequila) is still shrinking. The things to watch: whether U.S. distributor sales of JDTW to stores stabilize once the destocking ends, whether tequila pricing holds, and whether Gin Mare and Diplomático need further write-downs.