CONSTELLATION Brands beat second-quarter estimates for profit and sales on Tuesday, as resilient demand for its beer, such as Modelo Especial and Victoria, helped offset challenges facing the alcohol industry in a soft spending environment.
The company also said it has bought SpikedAde, a vodka-based ready-to-drink (RTD) beverage company, for at least $75 million, as part of its strategy to expand into new demand areas and strengthen its position in the fast-growing RTD category.
The company will pay $75 million at the closing of the deal for SpikedAde, and up to an additional $278 million over five years contingent to the brand's performance as well as Constellation's capital-allocation priorities.
Constellation's beer business benefited from major sporting events this year, as the FIFA World Cup and NBA Finals spurred watch parties and social drinking occasions.
Net sales for the quarter ended Aug. 31 rose 6 percent to $2.63 billion, while analysts, on average, estimated $2.54 billion, according to data compiled by LSEG.
It earned $3.74 per share on an adjusted basis during the quarter, compared with the estimate of $3.56.
Its wine and spirits business reported a 17 percent increase in quarterly net sales, while the beer segment posted a 5 percent rise.
Constellation reaffirmed its fiscal 2027 forecast for adjusted earnings at $11.20 to $11.90 per share, and organic net sales in the range of 1 percent decline to 1 percent growth.
The company lowered its annual operating margin forecast to 31 percent to 32 percent, from its prior forecast of 32 percent to 33 percent.
Its shares were down 4.5 percent in extended trading. They have fallen about 16 percent so far this year.
The company withdrew its fiscal 2028 forecast in April, citing a volatile operating environment and a limited near-term visibility.