Constellation Outperforms On Strength Of Crown, Raises Full-Year Earnings ProjectionsJuly 2, 2014
Constellation Brands shares jumped by more than 7% in pre-market trading this morning after the company outperformed expectations in its fiscal first quarter. For the three-month period ending May 31, Constellation reported net sales of $1.53 billion. This represents a 127% increase over the year-earlier period. A significant portion of that sales increase—$868 million—was due to the impact of Constellation gaining full control of Crown Imports (Constellation acquired Grupo Modelo’s 50% stake in Crown in June 2013, just after last year’s fiscal first quarter ended). But Crown’s organic growth also propelled sales. For the quarter, Crown’s net sales rose by 14%, as the Corona franchise and Modelo Especial both achieved solid growth.
Constellation’s spirits and wine business didn’t fare nearly as well. Net sales for spirits and wine fell by 1% on a constant currency basis, reflecting lower shipment volume primarily resulting from distributor destocking, which was partially offset by a favorable price mix. “While first quarter depletion trends were impacted by some inventory destocking at retail, we gained market share in IRI channels and experienced excellent performance for a number of our focus brands including Mark West, Black Box, Kim Crawford, Ruffino, Rex Goliath, and Woodbridge by Robert Mondavi,” said Constellation Brands president CEO Rob Sands. “Our wine and spirits business remains on track to meet its goals for the year,” Sands added.
Overall, Constellation’s first-quarter adjusted earnings per share (EPS) of $1.07 outpaced analysts’ projections by around 15%, leading the company to upgrade its EPS target for fiscal 2015 (ending February 28) to $4.10-$4.25 from its previous $3.90-$4.05.