The company, whose brands include Modelo and Corona, got a lot of questions about beer sales and pricing on its earnings call.
Constellation Brands Inc.’s stock slid 9% Thursday — its biggest one-day decline since a drop of 11.8% on March 23, 2020, at the start of the pandemic — after the company reported earnings for its fiscal third quarter. Analysts’ focus on weakness in beer sales dominated the company’s earnings call.
The company’s beer depletions, a metric that measures the number of cases sold by distributors to retailers, was 5.7% in the quarter, down from 8% to 9% in the past four quarters. On a call with analysts, Chief Executive Bill Newlands acknowledged a “series of headwinds” that developed in the latter part of the quarter. Those included higher price increases than usual at the company in response to cost pressures across its supply chain. Other parties in the distribution chain also raised prices, he said.
Given persistent inflation, Newlands said he does not expect to achieve Constellation’s medium-term target margins for the beer business of 39% to 40% for fiscal 2022.
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