Brown Forman ------ Fundamentals Scream in Agony

Brown-Forman (BF.A) the purveyors of Jack Daniels reported something called exceptional earnings. This was done with declining sales and even more severe declines in costs. So management can take the credit for lowering costs. There has been a small decline in outstanding shares so the EPS is easier to manage. But take a look at what they did to achieve the results.

Lower marketing costs for a purveyor of booze has never been a good idea. For some dark psychological reason the consumer needs to be reminded that he/she should have a drink. If you drink enough Jack you black out and have memory loss. This will not get them the marketing awards now and definitely will not get them the financial awards that we all want.

In the meantime, in the context of improved earnings the balance sheet is starting to wilt. Cash is down and receivables and inventories are up on declining sales. The fundamentals are screaming out in pain and agony. But they increase the dividend and increase short term borrowings. Time to close the bar.