Constellation marks reported earnings and sales on Thursday that beat analysts’ expectations second fiscal quarter 2024.
The Mexican beer company, owner of the Modelo Especial and Corona Extra brands, reported double-digit sales growth in its beer business as the division continues to dominate the overall beer and high-end categories. Meanwhile, sales of wine and spirits lagged.
The company raised its fiscal 2024 earnings per share forecast to a range of $9.60 to $9.80, up from a previous range of $9.35 to $9.65.
Here’s what Constellation reported for the three months ended Aug. 31, compared to Wall Street’s expectations, based on an analyst survey by LSEG, formerly known as Refinitiv:
- Earnings per share: $3.70 adjusted vs. $3.36 expected
- Revenue: $2.84 billion versus expected $2.82 billion
Constellation’s beer portfolio posted 12% sales growth, supported by 8.7% shipment growth. A particular bright spot was the Modelo family of brands: Modelo Especial grew by almost 9%, while the Modelo Chelada brands recorded growth of more than 40%.
Modelo Especial remains the best-selling brand in the U.S. beer category, the company said.
However, the company’s wine and spirits brands underperformed year-over-year.
The category saw a 14% decline in sales and a nearly 8% decline in emptying, an industry term for the number of boxes a distributor sells to retailers.
In a conference call with analysts on Thursday, CEO Bill Newlands said the company’s wine and spirits business continues to face lower demand, particularly among its mainstream brands, as consumers continue to favor higher-priced drinks.
The division wasn’t without standout brands, however: Constellation’s Meiomi and Kim Crawford wine brands posted decline growth of 7% and 6%, respectively, while craft spirit Mi Campo Tequila posted decline growth of more than 60%.
Newlands added that the wine and spirits business should begin to benefit from price increases and a boost from direct sales channels.
“The benefits of our wine and spirits strategy continue to prevail. We expected net sales growth and operating income growth for this business to accelerate through the end of fiscal ’24,” Newlands said. “And as we look to the coming years, we expect our wine and spirits business to continue to gain momentum and deliver better results.”
The company already achieved an increase in profits in June and reiterated its forecast. In the previous quarter, beer sales increased 11% year over year, driven by stable consumer demand and higher prices.