Brown-Forman Corporation, known for its beverages, has disclosed plans to decrease its structural costs and realign resources to bolster future growth. The announcement comes as the company's stock trades near its 52-week low of $33.28, with InvestingPro analysis suggesting the stock may be undervalued at current levels. This strategic initiative aims to save approximately $70 to $80 million annually, which will be partially reinvested to accelerate the company's growth.
The Louisville, Kentucky-based company, which is listed on the New York Stock Exchange under the tickers NYSE:BFA and NYSE:BFB, will streamline its organization, optimize production costs, and increase technology use to enhance efficiency. The plan includes a 12% reduction in its global workforce and the shutdown of its cooperage facility in Louisville.
Despite recent challenges, InvestingPro data shows the company maintains strong financial health with impressive gross margins of 59.2% and a healthy current ratio of 2.7. These changes are expected to be largely implemented within the fiscal year 2025, with full completion anticipated by the end of fiscal 2026.
Brown-Forman estimates that the restructuring will result in charges between $60 to $70 million, with the majority of these costs expected to be cash expenditures recognized in fiscal 2025. The charges will primarily consist of employee severance and benefits costs, estimated at $27 to $32 million, and expenses associated with the closure of the cooperage facility, projected to be $22 to $27 million.
The company's forward-looking statements caution that actual results may vary due to risks, uncertainties, and other factors, such as the ability to realize the anticipated benefits of the restructuring and potential changes in the size and timing of cost savings and charges. These statements, along with other details of the restructuring plan, are based on a press release statement filed with the Securities and Exchange Commission.
Brown-Forman's decision to streamline operations and focus on growth reflects a broader trend in the industry as companies adapt to changing market conditions and seek to allocate resources more efficiently. The impact of these changes on the company's financial performance will be closely watched by investors and industry analysts in the coming fiscal periods.
Notably, the company has maintained dividend payments for 54 consecutive years, demonstrating long-term financial stability. InvestingPro subscribers can access 10+ additional insights about Brown-Forman's financial health and growth prospects.
In other recent news, Brown-Forman Corporation has announced a significant change in its executive team. The company's Senior Vice President and Chief Accounting Officer, Kelli Nelson Brown, is set to retire on April 30, 2025, with Angela S. Enyard slated to succeed her effective May 1, 2025. This move is part of a planned succession and comes as Brown-Forman maintains robust operational performance, boasting gross profit margins of 59.21%.
Enyard, who has been with the company since 2013 and most recently served as Vice President, Global Business Solutions, will see an adjustment in her compensation package in line with her new role. Starting May 1, 2025, her annual salary, inclusive of holiday bonus, will be $291,676, with additional short-term and long-term equity incentive compensation opportunities.
This transition, part of Brown-Forman's commitment to internal leadership development and continuity in financial management, is seen as a recent development. The details of these changes were outlined in a press release statement filed with the Securities and Exchange Commission. It's worth noting that Brown-Forman has shown strong shareholder commitment with 54 consecutive years of dividend payments, currently yielding 2.23%.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.