Jack Daniel's maker Brown-Forman misses profit estimate as costs pinch

(Reuters) -Jack Daniel's maker Brown-Forman missed quarterly profit expectations on Wednesday, hurt by higher input costs and sluggish demand for its pricier whiskeys like Woodford Reserve and Gentleman Jack in the U.S.

Shares of the company were down as much as 6%, touching a two-month low, as its net sales in the first quarter also fell marginally short of analysts' expectations.

Higher input costs, including for agave, grains and wood, took a toll on the spirits maker, even as shipment volumes declined in the United States after wholesalers worked to trim inventories.

Excluding items, Brown-Forman earned 48 cents per share, compared with a profit estimate of 53 cents per share, as per Refinitiv data.

Advertising expenses in the quarter rose 19%, while overall expenses were up 14% as it also battled a tough labor market.

The company increased the prices of its spirits between 2% and 3% year-on-year, as it grappled with supply-chain and input-cost issues that peaked in the last fiscal.

A 90-basis-point expansion in gross margin in the quarter was driven by a 250-basis-point benefit from higher pricing as well as a let up in supply-chain costs, Brown-Forman said on a post-earnings call.

Distributor inventories - or the stock that wholesalers hold - declined 11% in the U.S. in the reported quarter, contributing to an 8% fall in the company's net sales in the country.

Its quarterly net sales rose 3%, to $1.04 billion, compared with analysts' average estimate of $1.05 billion.

Still, Brown-Forman reaffirmed its annual target of organic net sales growth between 5% and 7% and said it expects demand trends to normalize after two years of strong growth.

(Reporting by Juveria Tabassum; Editing by Pooja Desai)