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Earnings Results: Luxury winemaker Duckhorn is raising prices, but thinks its customers can handle it


Luxury winemaker Duckhorn Portfolio on Wednesday said it expected muted profit growth in the year ahead, even as it raises prices, but it said it expected its premium-leaning customers to take the increases in stride.

“While we are mindful of macro uncertainties, we believe planned pricing increases will generally offset cost-of-goods inflation,” the company said in reporting fiscal fourth-quarter earnings. “Profitability growth will be moderately tempered.”

Still, Duckhorn
which runs wineries, winemaking facilities and vineyards, said its fourth quarter benefited from “the continued premiumization tailwind,” or growing consumer preference for higher-end wine.

“Looking to fiscal-year 2023, we believe we are well-positioned to continue to outpace the growing luxury wine segment,” Chief Executive Alex Ryan said in the company’s fourth-quarter release. “While we are mindful of macro uncertainties, we believe that our core customer will continue to be resilient.”

The company reported fourth-quarter net income of $5.4 million, or 5 cents a share, compared with $7.4 million, or 6 cents a share, in the year-earlier period.

On an adjusted basis, Duckhorn earned 8 cents a share, the same result as the prior-year period.

Sales were $78.0 million, compared with $70.9 million in the year-earlier period.

Analysts polled by FactSet expected adjusted earnings of 8 cents a share, on sales of $77.5 million.

Duckhorn said it expected net sales between $393 million and $401 million for fiscal 2023. That’s higher than the $372.5 million logged over the past 12-month period, but the midpoint of that range is below FactSet forecasts for $400.2 million. The company forecast adjusted earnings per share of between 62 cents and 64 cents, compared with analysts’ expectations for 67 cents a share.

Shares fell 0.4% after hours.

During a conference earlier this month, Chief Financial Officer Lori Beaudoin said Duckhorn expected to raise prices in the fiscal year ahead, as it faces higher costs for materials like glass. But she said so far, they’d seen little pushback from customers, and little competitive discounting among rivals.

“The retailers would tell us if the wine is slowing down that we need to address the pricing, and we haven’t seen that,” she said. “What we’ve seen is, we think customers are a little more accepting of the price increases right now. They’re seeing it in so many of their other products, and that’s really helped us to maintain the margins that we expect to make.”

Duckhorn stock is down 37% so far this year. By comparison, the S&P 500 Index

has fallen 22% over that time.

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