Beam profits from new business strategy
The liquor company is making a big bet that premium spirits will take off as the economy recovers.
The liquor company beat Wall Street expectations in its fourth quarter, reporting Friday that profit rose to $94.1 million, or 59 cents a share, from $85.4 million, or 55 cents a share, a year earlier. Sales rose to $638 million from $630 million.
On an adjusted basis, profit was 69 cents a share -- higher than the 67 cents analysts expected. But sales didn't quite hit the $691 million analysts were looking for. Shares of Beam were up 2% on the news Friday.
The company is emerging from a tumultuous year in which it became a standalone liquor company. It sold its golf business and spun off its home products segment. It changed its name from Fortune Brands to that of its top-selling product: Jim Beam.
Beam's CEO has some interesting thoughts on the company's relatively young portfolio of spirits in the following video.
Post continues below.
It was always bizarre that a spirits company would make golf balls, faucets and cabinets. Fortune Brands' portfolio was wildly diverse, to the point that investors were confused and company strategy suffered.
So Fortune pared the business to focus on booze. It already made some of the biggest names in the business, including Maker's Mark bourbon, Sauza tequila and Canadian Club whiskey.
And then it decided to start appealing to women. "Two years ago, 100% of our marketing was geared to men," the company's chief marketing officer told Bloomberg last year. "We weren't talking to women in any specific way."
Boy, has that changed. Beam bought the up-and-coming Skinnygirl brand of cocktails, which includes White Cranberry Cosmos and low-calorie margaritas. Its Sauza tequila line began advertising on Food Network and hosting margarita parties.
Beam is still selling to men, of course. It's rolled out higher-end spirits like the Devil's Cut, which is made from whiskey pulled from the wood of barrels after the bourbon inside has been emptied out. Beam also entered the Irish whiskey business last year with its purchase of Cooley distillery.
The company still has work to do. It says its earnings this year will grow only in the high single digits -- less than the 10% growth Wall Street expected. And its revenue growth needs to improve.
But the company has clearly made a big bet on premium spirits that appeal to men and women. And that's a good bet, particularly as the world emerges from a recession and as emerging markets, including China, continue to be interested in premium liquor.
I always wanted to open a alcohol and gambling joint where I would sell booze in the first half of the building and gambled in the back half. I want to call it Licker in the Front and Poker in the Rear.
Always wanted to pull that line.
The alcohol industry would be better off if a mill stone was hung around its neck and it was tossed into the sea.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
The apparel chain takes a hard hit after blaming the weather for its quarterly sales decline. But cold temperatures don't explain the drop in full-year sales as well.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.