Kosta Browne buoys Q2 sales growth for Napa Valley’s Duckhorn
The Duckhorn Portfolio (NYSE: NAPA), the Napa Valley-based producer of brands such as Duckhorn Vineyards, Decoy and Kosta Browne, reported fiscal second-quarter net sales were up 4.8% from a year before, boosted by direct-to-consumer sales, but quarterly earnings were down 16.8%.
Net revenues for the quarter, ended Jan. 31, were $103.5 million. Net income was $14.9 million, the company reported Wednesday. However, adjusted earnings were $21.1 million, up 8% from a year before.
Duckhorn attributed the quarterly sales growth to the positive impact from pricing changes, mainly from its direct-to-consumer sales channel performance. Leading that were second-quarter releases from Kosta Browne.
Over 12 months, Duckhorn’s sales-channel mix shifted from 67.2% wholesale through distributors to 61%, while DTC sales rose from 13% to 19.6%. Wholesale directly to California wine shops and restaurants was barely changed downward at 19.1%.
Half-year net sales were $211.6 million, up 4.3% from a year before, and earnings for those six months were $34.7 million, down 11.5%.
“We’ve been executing a very focused, very exclusive luxury-based wine strategy,” CEO Alex Ryan told analysts on the financial-results conference call Wednesday. He had been asked what wine companies should do to attract more consumers.
"I don't know if taking a play out of big beer or big spirits is the right approach (for the broader wine market), but I think we are touching our consumers largely in DTC ways,“ Ryan said. ”It's a form of marketing — in the ways they want to be contacted and engaged with. And we as an industry are going to have to continue to do that.“
The company increased its full-year projections of net sales to $398 million–$404 million and of proforma earnings to $135 million–$138 million, or 63–65 cents a share.
Duckhorn’s stock price was $15.91 at 2:30 p.m. Thursday, up 6.1%.
Jeff Quackenbush covers wine, construction and real estate. Before coming to the Business Journal in 1999, he wrote for Bay City News Service in San Francisco. Reach him at jquackenbush@busjrnl.com or 707-521-4256.
