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What to Expect from Constellation Brands’ Fiscal Q1 2019 Sales



Sales growth trend

Constellation Brands’ (STZ) sales grew 3.5% to $7.6 billion in fiscal 2018, which ended on February 28. The company’s sales growth rate slowed down compared to about 12% in fiscal 2017. One of the reasons for the lower growth rate was the impact of the divestiture of the company’s Canadian wine business on the wine and spirits segment sales. Constellation Brands’ wine and spirits segment sales declined 5.7% in fiscal 2018.

However, sales of the company’s beer segment grew 10.2% in fiscal 2018 driven by higher volumes within the company’s Mexican beer portfolio and higher pricing in select markets.

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Management’s outlook

Constellation Brands expects its fiscal 2019 beer segment sales to increase by 9%–11%. The company expects an improvement in its wine and spirits segment performance with a sales growth forecast in the range of 2%–4% in fiscal 2019. Higher volume and the company’s premiumization strategy are expected to drive the wine and spirit segment sales.

Quarterly sales growth

In the fourth quarter of fiscal 2018, which ended on February 28, the company’s sales grew 8.5% to $1.77 billion, exceeding the consensus analyst sales estimate of $1.75 billion. Continued demand for the company’s imported beer brands drove the fiscal fourth quarter sales growth.

For the first quarter of fiscal 2019, which ended on May 31, analysts expect Constellation Brands’ sales to rise 5.5% to about $2.0 billion.

Molson Coors Brewing’s (TAP) sales declined 4.8% to $2.3 billion in the first quarter of 2018. Molson Coors cited overall softness in the US market and a $50 million adverse impact of the reversal of the indirect tax provision benefit in Europe as the reasons for lower sales. Also, the company under-shipped beer to its wholesalers due to the longer-than-anticipated rollout of a new ordering system.

Let’s discuss Constellation Brands’ margins in the next part of this series.


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