By Evie Liu
Beers are selling well at Constellation Brands. Wine and spirits? Not so much.
The maker of Modelo Especial is set to report February quarter earnings on Thursday before the market open, and investors will likely take a close look at the company's sales breakdown.
Analysts polled by FactSet are expecting Constellation to post $2.1 billion in sales for its fiscal fourth quarter ended in February, a 5% increase from the year-ago period. Wall Street forecasts earnings of $2.11 a share for the quarter, which would mark 6.6% growth from a year ago.
Modelo Especial, a Mexican lager, has seen strong volume growth over the past decade as American consumers -- especially young, non-Hispanic drinkers -- have increasingly preferred imported, more expensive beer.
Last year, Modelo Especial surpassed Anheuser-Busch InBev's Bud Light to become the top-selling beer in the U.S. by sales dollar, after the latter's involvement with transgender influencer Dylan Mulvaney last year triggered a boycott. Bud Light sales have slid 30% since then.
Constellation stock has climbed 8.6% so far in 2024 and 16% over the last 12 months, compared the S&P 500's gains of 8.2% and 26%, respectively.
As Constellation's beer business booms, however, the company is still seeing weakness in other segments. For the nine months ended in November 2023, Constellation's total revenue grew 5% from the previous year, but its wine and spirits sales declined more than 10%.
At the company's previous earnings report filed in January, management said organic net sales for the wine and spirits business are expected to decline 7% to 9% for the fiscal year that just ended in February. The company projected that full-year operating income would decline 6% to 8% due to "broader marketplace deceleration and U.S. wholesale underperformance."
The company had also cut its earnings forecast for the full fiscal year to a range of $9.15 to $9.35 a share, down from earlier guidance of between $9.60 and $9.80 a share.
Last month, Constellation Brands named a new leader of its wine and spirits division in hope to recharge growth in the segment, which makes up about one fifth of the firm's total sales.
Write to Evie Liu at evie.liu@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
April 10, 2024 16:30 ET (20:30 GMT)
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