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What Hurt Constellation Brands’ Fiscal 3Q18 Sales?



Disappointing sales

Constellation Brands (STZ) disappointed investors with a decline in its sales in fiscal 3Q18[1. Fiscal 3Q18 ended on November 30, 2017] and by missing analyst expectations. The company delivered sales of about $1.80 billion in fiscal 3Q18, missing the consensus analyst expectation of $1.87 billion.

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Headwinds that impacted sales

Constellation Brands’ sales declined 0.6% on a year-over-year basis in fiscal 3Q18. The company’s top line in fiscal 3Q18 was negatively affected by lower wine and spirits sales owing to the impact of the divestiture of the company’s Canadian wine business. Constellation Brands sold its Canadian wine business in December 2016, which was in line with its strategy to focus on its higher growth premium businesses.

The weakness in the company’s wine and spirits business offset the impact of higher beer sales. We’ll discuss the company’s segment performance in detail in part four of this series. The company’s sales performance in fiscal 3Q18 came in below its 3.2% sales growth in fiscal 2Q18 and its 10.3% sales growth in fiscal 3Q17.

Peer performance   

The comparable third quarter was not good for Constellation Brands’ peers Anheuser-Busch InBev (BUD) and Molson Coors Brewing (TAP). In 3Q17, Anheuser-Busch InBev’s (BUD) global revenue of $14.7 billion missed the analyst sales expectation of about $15.0 billion. The performance of the largest beer maker was adversely impacted by lower global volumes mainly due to unfavorable weather in several parts of US. Sales of Molson Coors Brewing fell 2.1% to $2.9 billion in 3Q17 due to lower financial volumes.

We’ll discuss Constellation Brands’ segments in the next part of this series.


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