European Investor
06 Oct 2025, 20:37
Constellation Brands reported second-quarter fiscal 2026 results showing mixed performance amid ongoing consumer headwinds and portfolio adjustments.
Financial overview:
Net sales came in at $2.48 billion, down 15% year over year. Reported operating income rose 171% to $874 million, while reported EPS reached $2.65. On a comparable basis, operating income was $886 million, down 13%, with EPS of $3.63, down 16% from last year. Year-to-date, the company generated $1.5 billion in operating cash flow and $1.1 billion in free cash flow.
Beer business:
Beer remained the company’s core driver despite a 7% decline in net sales and a 12% drop in operating income, mainly due to softer demand and distributor inventory rebalancing. Depletions fell 2.7%, led by modest declines in Modelo Especial, Corona Extra, and Modelo Chelada, offset by double-digit growth in Pacifico and Victoria. Constellation retained its position as the #1 dollar share gainer in the U.S. beer category, with Modelo Especial leading overall sales.
Wine and Spirits:
The segment saw a 65% decline in net sales to $136 million and a swing to a $19.8 million operating loss, primarily from the SVEDKA divestiture and 2025 wine asset sales. Excluding divestitures, organic depletions rose 2%, and the portfolio outpaced the premium wine segment in both dollar and volume sales.
Shareholder returns and guidance:
The company repurchased $604 million of stock through September and declared a $1.02 quarterly dividend. Fiscal 2026 EPS guidance was revised to $9.86–$10.16 reported and reaffirmed at $11.30–$11.60 comparable, with expected operating cash flow of $2.5–$2.6 billion and free cash flow of $1.3–$1.4 billion.
Outlook:
Management expects an enterprise organic net sales decline of 4%–6%, with beer down 2%–4% and wine and spirits down 17%–20%. CEO Bill Newlands and CFO Garth Hankinson emphasized continued execution on strategic goals, cost savings, disciplined investment, and shareholder returns despite a challenging operating backdrop.
Financial overview:
Net sales came in at $2.48 billion, down 15% year over year. Reported operating income rose 171% to $874 million, while reported EPS reached $2.65. On a comparable basis, operating income was $886 million, down 13%, with EPS of $3.63, down 16% from last year. Year-to-date, the company generated $1.5 billion in operating cash flow and $1.1 billion in free cash flow.
Beer business:
Beer remained the company’s core driver despite a 7% decline in net sales and a 12% drop in operating income, mainly due to softer demand and distributor inventory rebalancing. Depletions fell 2.7%, led by modest declines in Modelo Especial, Corona Extra, and Modelo Chelada, offset by double-digit growth in Pacifico and Victoria. Constellation retained its position as the #1 dollar share gainer in the U.S. beer category, with Modelo Especial leading overall sales.
Wine and Spirits:
The segment saw a 65% decline in net sales to $136 million and a swing to a $19.8 million operating loss, primarily from the SVEDKA divestiture and 2025 wine asset sales. Excluding divestitures, organic depletions rose 2%, and the portfolio outpaced the premium wine segment in both dollar and volume sales.
Shareholder returns and guidance:
The company repurchased $604 million of stock through September and declared a $1.02 quarterly dividend. Fiscal 2026 EPS guidance was revised to $9.86–$10.16 reported and reaffirmed at $11.30–$11.60 comparable, with expected operating cash flow of $2.5–$2.6 billion and free cash flow of $1.3–$1.4 billion.
Outlook:
Management expects an enterprise organic net sales decline of 4%–6%, with beer down 2%–4% and wine and spirits down 17%–20%. CEO Bill Newlands and CFO Garth Hankinson emphasized continued execution on strategic goals, cost savings, disciplined investment, and shareholder returns despite a challenging operating backdrop.
