AI Takeaway
Brown-Forman (BF.B) reported a challenging fiscal year 2026 with revenue declining 1.2% to $3.93B and net income falling 17.7% to $715M, though operating cash flow surged 67.2% to $1.0B and gross margins improved to 60.5%.
Revenue
$3.93B
-1.18% YoY
EPS (Basic)
$1.53
-16.85% YoY
Gross Margin
60.5%
++1.60% YoY
Operating Income
$1B
-9.58% YoY
Filed · Analysis updated · Source: SEC EDGAR 10-K filing
Net revenues fell 1.2% year-over-year from $3.975B to $3.928B, reflecting ongoing softness in the premium spirits category and challenging macroeconomic conditions affecting consumer discretionary spending globally.
Source: Source: 10-K Income Statement, Financial Data
Despite the revenue decline, gross profit grew 1.5% to $2.378B as cost of revenue fell 5.0% to $1.550B, pushing gross margin up approximately 160 basis points to 60.5%, suggesting improved pricing power or favorable input cost dynamics.
Source: Source: 10-K Income Statement, Financial Data
Selling, general & administrative expenses rose 8.5% to $807M, significantly outpacing revenue growth and contributing to a 9.6% decline in operating income to $1.001B, compressing operating margin by approximately 240 basis points to 25.5%.
Source: Source: 10-K Income Statement, Financial Data
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Upgrade to unlockNet income fell 17.7% to $715M and basic EPS declined 16.8% to $1.53, significantly underperforming revenue trends. The divergence between gross profit growth and net income decline points to structural cost pressures, particularly in SG&A, that could persist if not addressed.
Source: Source: 10-K Income Statement, Financial Data
Unlock 4 more detailed risk analysis
Upgrade to unlockReported EPS of $0.12 versus the $0.33 analyst consensus — a -63.5% miss for FY2026.
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue | $3.93B | $3.98B | -1.18% |
Cost of Revenue | $1.55B | $1.63B | -5.02% |
Gross Profit | $2.38B | $2.34B | +1.49% |
Operating Income | $1B | $1.11B | -9.58% |
Net Income | $715M | $869M | -17.72% |
EPS (Basic) | $1.53 | $1.84 | -16.85% |
EPS (Diluted) | $1.53 | $1.84 | -16.85% |
SG&A Expense | $807M | $744M | +8.47% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Total Assets | $7.89B | $8.09B | -2.37% |
Current Assets | $3.99B | $4.2B | -4.86% |
Total Liabilities | $3.87B | $4.09B | -5.35% |
Current Liabilities | $1.23B | $1.08B | +14.07% |
Stockholders' Equity | $4.02B | $3.99B | +0.68% |
Cash & Equivalents | $308M | $444M | -30.63% |
Long-Term Debt | $2.43B | $2.42B | +0.54% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Cash Flow | $1B | $598M | +67.22% |
Investing Cash Flow | $-71M | $249M | -128.51% |
Financing Cash Flow | $-1.07B | $-843M | -27.40% |
Share Buybacks | $400M | $0 | — |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Gross Margin | 60.5% | 58.9% | +1.60% |
Operating Margin | 25.5% | 27.8% | -2.37% |
Net Margin | 18.2% | — | — |
ROE | 17.8% | — | — |
ROA | 9.1% | — | — |
Current Ratio | $3.239 | — | — |
Debt to Equity | $0.964 | — | — |
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Brown-Forman reported FY2026 revenue of $3.928B (down 1.2%) and net income of $715M (down 17.7%), with basic EPS of $1.53 versus $1.84 in the prior year. The headline numbers were pressured by an 8.5% jump in SG&A expenses to $807M, though gross margins improved to 60.5% and operating cash flow surged 67.2% to $1.0B.
The key takeaways are: gross margins improved to 60.5% despite a revenue decline, but rising SG&A costs drove a 9.6% drop in operating income to $1.001B and a 17.7% fall in net income to $715M. On the positive side, operating cash flow jumped 67.2% to $1.0B and the company returned $400M to shareholders through buybacks.
Net income declined 17.7% to $715M primarily because SG&A expenses rose 8.5% to $807M, significantly outpacing the 1.2% revenue decline and eroding operating leverage. Additional below-the-line costs — such as interest expense on $2.434B of long-term debt — likely further weighed on the bottom line beyond the operating cost pressures.
Brown-Forman maintains a healthy balance sheet with a current ratio of 3.24, stockholders' equity of $4.020B, and strong operating cash flow of $1.0B. However, long-term debt of $2.434B (debt-to-equity of ~0.96) and a 30.6% decline in cash to $308M alongside a 14.1% rise in current liabilities are areas to watch.
Yes, Brown-Forman repurchased $400M worth of shares in FY2026, compared to zero buybacks in the prior year. This was funded by the company's strong operating cash flow of $1.0B and contributed to total financing cash outflows of $1.074B for the year.