uploads///STZ Sales

Can Constellation Brands’ Sales Surpass Expectations?

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Oct. 1 2018, Published 8:02 a.m. ET

Fiscal 2019 first-quarter recap

Constellation Brands (STZ) generated sales of $2.05 billion in the first quarter of fiscal 2019[1. The first quarter of fiscal 2019 ended on May 31, 2018.] and exceeded analysts’ expectations by 0.2%. Sales grew 6.1% year-over-year compared to 3.4% but were lower sequentially than 8.5% growth in the fourth quarter of fiscal 2018.

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Headwinds and tailwinds in the first quarter

Constellation Brands’ sales growth in the first quarter of 2019 was due to a rise in beer sales, driven by higher volumes of its Mexican beer portfolio. Sales growth was negatively impacted by a decline in net sales for wine and spirits due to unfavorable shipment volumes.

Expectations for second-quarter sales

Analysts expect Constellation Brands’ sales to rise 8% to $2.3 billion in the second quarter of fiscal 2019, which ended on August 31, 2018. For fiscal 2019, which ends on February 28, 2019, analysts expect sales to grow 7.4% to $8.1 billion.

The company expects the performance of its Wine and Spirits segment to improve in the second half of fiscal 2019, which includes the crucial holiday selling season. Despite a challenging first quarter for that segment, the company kept its fiscal 2019 guidance intact with segment sales growth expected at 2%–4%.

Beer sales continue to be the primary growth driver for Constellation Brands. We’ll look at that next.

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