Beer sales helped Constellation Brands, but wine and spirits revenues stayed weak

By Steve Gelsi and Emily Bary

Constellation Brands cites nearly 11% net sales growth from its beer business as positive highlight

Constellation Brands Inc.'s stock rose in premarket trading Thursday after the spirits seller lifted its adjusted fiscal 2025 profit outlook above Wall Street expectations and delivered a stronger-than-expected fourth-quarter profit, as its beer business outperformed its expectations.

Chief Executive Bill Newlands said the company's beer business notched its 56th quarter of volume growth while maintaining "best in class margins." Meanwhile, wine and spirits sales fell.

Constellation (STZ) reported fiscal fourth-quarter net income of $392.4 million, or $2.14 a share, up from $223.0 million, or $1.21 a share, in the year-earlier period.

The spirit maker's adjusted earnings per share rose to $2.26 from $1.98 in the previous year. This was ahead of the FactSet consensus estimate of $2.21 a share.

Revenue ticked up to $2.30 billion from $2.15 billion, while the FactSet consensus was for $2.10 billion.

Constellation Brands cited nearly 11% net sales growth from its beer business, along with 8.9% depletion growth, which is a measure of how products are sold at the retail level.

Modelo Especial saw 14% depletion growth and Pacifico saw 22% depletion growth.

Operating margin grew by 0.3% to 34.4%, as Constellation benefitted from cost-savings initiatives, favorable pricing and reducedmarketing and other expenses. The company also faced higherpackaging and raw-materials costs.

Wine and spirits sales were down 6% in the quarter "as unfavorable marketplace dynamics continued to pressure volumes, primarily impacting our largest premium brands," Constellation Brands said.

The company expects $13.50 to $13.80 in adjusted EPS for fiscal 2025. Analysts were modeling $13.43 a share.

Constellation Brands is forecasting 7% to 9% growth in beer sales. For wine sales, the company expects sales to decline by about 0.5% or possibly rise by up to 0.5% in the coming year.

Prior to Thursday's trades, Constellation Brands' stock was up 9.6% in 2024, compared to an 8.2% jump by the S&P 500 SPX.

-Steve Gelsi -Emily Bary

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04-11-24 0925ET

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