Constellation Raises Fiscal 2027 Reported Earnings Range
The beer and wine maker lifted its fiscal 2027 reported EPS outlook to $11.85-$12.55 after second-quarter net sales of $2,633 million.
Constellation Brands (STZ) raised its fiscal 2027 reported earnings-per-share outlook to $11.85 to $12.55, from $11.50 to $12.20, after a second quarter in which net sales growth reversed a first-quarter decline.
The international producer of beer, wine, and spirits posted reported net sales of $2,633 million for the three months ended August 31, 2026, up 6% from a year earlier, after a 3% decline in the prior quarter. Reported earnings were $3.32 a share, up 25% from a year earlier. Comparable EPS was $3.74.
Reported operating income was $805 million. Comparable operating income was $897 million.
President and Chief Executive Officer Nicholas Fink said the company was the No. 1 dollar share gainer in beverage alcohol during the second quarter and that dollar and volume share gains in both Beer and Wine & Spirits had accelerated relative to the first quarter.
Beer, the core of the business, delivered net sales of $2,473.6 million, up 5%, after 2% growth in the prior quarter, on a 5.5% increase in shipment volumes. Beer operating income rose 1% to $964.2 million. Operating margin decreased 160 basis points to 39.0%, which reflected increased marketing investment and other SG&A spend that more than offset lower tariff expenses and favorable fixed-cost absorption.
Depletions decreased 0.6%. Modelo Especial fell about 2% and Corona Extra about 5%, partially offset by growth of about 19% at Pacifico, 15% at Victoria, and 5% at Modelo Chelada. One extra sell day was largely offset by a shift in Labor Day timing.
In Circana U.S. tracked channels, the Beer Business ranked as the No. 1 dollar and volume share gainer and outperformed the total beer category by 4 percentage points in year-over-year dollar and volume sales. Modelo Especial remained the No. 1 brand by dollar sales and was the No. 3 dollar share gainer. Pacifico became a top-10 brand by dollar sales.
Wine and Spirits net sales were $159.4 million, up 17%, reversing a 47% reported decline in the prior quarter, on a 15.4% rise in shipment volumes. Segment operating income swung to a $6.1 million profit from a $19.8 million loss a year earlier, with operating margin improving to 3.8% from negative 14.6%. The margin turn reflected COGS favorability from recoveries of U.S. tariffs and savings across marketing and other SG&A from optimization and restructuring.
Depletions increased 10.2%, after 6.6% organic depletion growth in the prior quarter, driven by Kim Crawford growth of about 11% and Mi CAMPO growth of about 51%. The wine portfolio was the No. 3 dollar share gainer in the total wine category.
For the six months ended August 31, 2026, operating cash flow was $1.5 billion, down 1%, and free cash flow was $1.1 billion, up 4%. The company repurchased $530 million of shares year-to-date through September 2026 and declared a quarterly cash dividend of $1.03 a share of Class A Common Stock.
Fisk said that through the first half of fiscal 2027 the company returned more than $800 million to shareholders through share repurchases and dividends, maintained a target comparable net leverage ratio of about 3.0 times, and continued to invest in brand marketing.
The company reaffirmed a comparable EPS outlook of $11.20 to $11.90, an operating cash flow target of $2.4 billion to $2.5 billion, and a free cash flow target of $1.6 billion to $1.7 billion. Fiscal 2027 assumptions include enterprise organic net sales growth of negative 1% to 1%, beer net sales growth of negative 1% to 1%, and wine and spirits organic net sales growth of negative 1% to 1%. Beer operating margin is assumed at 37% to 38% and wine and spirits at 5% to 6%.
After the quarter, Constellation acquired SpikedAde, a spirit-based ready-to-drink brand, for a $75 million payment at close plus up to $278 million in contingent consideration over five years. The acquisition does not impact the fiscal 2027 outlook.