****

Shares of Brown-Forman, the producer of Jack Daniel's whiskey, took an 18% hit on Thursday after the company disclosed fiscal fourth quarter earnings misses across the board. Revenue for the quarter stood at $894 million, falling short of Wall Street's anticipation of $967.4 million. Similarly, earnings per share came in at 31 cents, missing the expected estimate of 34 cents.

Net income for the quarter amounted to $146 million, or 31 cents per share, representing a steep 45% decline from the $266 million, or 56 cents per share, reported the previous year. The company's whiskey products, including Jack Daniel's and Woodford Reserve, remained flat in net sales for fiscal year 2025 compared to the previous year. However, Brown-Forman's tequila and ready-to-drink portfolios saw significant declines of 14% and 6%, respectively.

Looking ahead, Brown-Forman warned of ongoing challenges for fiscal year 2026, citing macroeconomic and geopolitical uncertainties as major factors. The company anticipates single-digit declines in both organic net sales and organic operating income. CEO Lawson Whiting acknowledged the difficulty of the current economic landscape but reiterated the company's progress despite these unprecedented challenges.

Adding to the company's woes are the recent tariffs and consumer spending weaknesses. Analysts at Bernstein highlighted that a 50% tariff on U.S. whiskey sold in the EU could potentially reduce Brown-Forman's earnings before interest and taxes (EBIT) by 10%. This places Brown-Forman at a disadvantage compared to peers like Constellation Brands, Molson Coors, and Anheuser-Busch, particularly in a recessionary environment where distillers often underperform brewers.

Furthermore, the geopolitical climate has not been conducive for Brown-Forman. Canadian liquor stores have begun removing Jack Daniel’s and other U.S. products in retaliation to tariffs imposed by President Donald Trump's administration. Additionally, the recent decision by the Trump administration to double tariffs on steel and aluminum imports to 50% has further strained the company's ready-to-drink portfolio.

In summary, Brown-Forman faces a tough road ahead, grappling with economic volatility, tariffs, and consumer behaviors. The recent earnings report underscores the complex challenges awaiting the company in the coming fiscal year.