Constellation Brands Inc.’s stock reversed early losses to trade higher early Friday, after the wine and spirits distributor posted better-than-expected profit for its fiscal third quarter, though sales fell short and the company lowered its full-year guidance.
The company posted net income of $ 509.1 million. or $ 2.76 a share, for the quarter to Nov. 30, up from $ 467.7 million, or $ 2.52 a share, in the year-earlier period. Adjusted per-share earnings came to $ 3.19, ahead of the $ 3.01 FactSet consensus.
Sales rose to $ 2.471 billion from $ 2.437 billion a year ago, below the $ 2.538 billion FactSet consensus.
CEO Bill Newlands said Modelo Especial delivered double-digit volume growth and retained its position as number one beer brand in the U.S. by dollar sales, while Corona Extra and Pacifico were top 10 share gainers in the U.S. beer category.
Modelo Especial replaced Anheuser-Busch’s Bud Light BUD, +0.19% as the best-selling beer in the U.S. in 2023, partly due to the backlash against Bud Light that began in April in response to its partnership with trans influencer Dylan Mulvaney.
The performance in the beer segment, “has reinforced our conviction in our Fiscal 2024 enterprise outlook, despite an adjustment to our Wine and Spirits Business guidance due to near-term headwinds in the wine market,” Newlands said in a statement.
The company is now expecting fiscal 2024 EPS of $ 9.15 to $ 9.35, down from prior guidance of $ 9.60 to $ 9.60.
The company’s beer business posted a 4% increase in sales in the quarter, driven by a 3.4% increase in shipments. Depletion volume, a metric that measures the number of cases sold by distributors to retailers, rose 8.2%. after rising 7.9% in the second quarter.
In the wine and spirits segment, sales fell 8%, as shipments were down 11.6%. Depletions fell 10% in the period, after falling 7.8% in the second quarter.
The wine and spirits business is expected to see fiscal 2024 organic sales fall 7% to 9% and operating income to fall 6% to 8%, mostly due to a slowing in the market and U.S. wholesale underperformance.
The stock has gained 16% in the last 12 months, while the S&P 500 SPX, +0.47% has gained 23%.