Why Constellation Brands’ 1Q Sales Rose
Constellation Brands (STZ) generated sales of $1.9 billion in fiscal 1Q18, which ended on May 31, 2017. The company’s sales rose 3.4% on a year-over-year basis in fiscal 1Q18. However, fiscal 1Q18 sales missed the consensus Wall Street analyst sales estimate by 0.6%.
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What drove fiscal 1Q18 sales?
Constellation Brands’ sales growth in fiscal 1Q18 was driven by the strength of its beer portfolio. The company’s Beer segment sales rose by an impressive 7.9%. We’ll discuss the Beer segment sales in detail in the next part of this series.
The company’s sales growth slowed down on a sequential as well as year-over-year basis. The company’s fiscal 1Q18 sales growth of 3.4% was lower than the 5.5% growth in fiscal 4Q17 and the 14.7% growth in fiscal 1Q17.
The company’s sales in fiscal 1Q18 were adversely impacted by a 3.8% decline in the Wine and Spirits segment’s sales. The segment’s sales were negatively affected by the divestiture of the company’s Canadian wine business. Read part five of this series for more details on the performance of the company’s Wine and Spirits segment.
Excluding the impact of currency fluctuations, acquisitions, and divestitures, Constellation Brands’ organic sales growth was 7.0% in fiscal 1Q18.
Performance of peers
Anheuser-Busch InBev’s (BUD) organic sales rose 3.7% in 1Q17. This growth was the result of the company’s revenue management initiatives and the performance of its premium brands. Molson Coors Brewing’s (TAP) organic net sales fell 0.5% in 1Q17 owing to weak US volumes.
As discussed in part two of this series, Constellation Brands raised its earnings guidance for fiscal 1Q18. However, the company kept its Beer and Wine and Spirits segment’s sales guidance intact. We’ll discuss the Beer segment sales and the company’s outlook in the next part of this series.