Constellation Brands, Inc.’s (STZ) premiumization strategy has been encouraging, as demonstrated by the accelerated growth of its Power Brands. The company has been seeing strength in the beer business for a while now. In the latest announcement, STZ unveiled an agreement with a global spirits company, Sazerac, to divest its SVEDKA brand. However, the financial terms of the deal have been kept under wraps.More on STZ’s Latest NewsThis agreement is built on Constellation Brands’ strategic initiatives to alig ...

Constellation Brands, Inc. (NYSE:STZ) Morgan Stanley Global Consumer & Retail Conference December 3, 2024 2:15 PM ET Company Participants Garth Hankinson - CFO Conference Call Participants Dara Mohsenian - Morgan Stanley Dara Mohsenian Please see the Morgan Stanley research website at www.morganstanley.com for research disclosures. And if you have any questions, you can reach out to your Morgan Stanley representative. With that, I'm very pleased to welcome Constellation Brands and Garth Hankinson, Constella ...

Constellation Brands Inc. Svedka vodka at a liquor store in the Upper East Side neighborhood of New York, US, on Friday, June 28, 2024.Constellation Brands announced Tuesday it will sell its Svedka vodka brand to New Orleans-based spirits company Sazerac.The transaction is expected to close in the coming months, Constellation said in a press release. It did not disclose the value of the deal."The actions we have taken over the past several years to reshape our wine and spirits portfolio support our efforts ...

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ROCHESTER, N.Y., Oct. 08, 2024 (GLOBE NEWSWIRE) -- Constellation Brands (NYSE: STZ), a leading beverage alcohol company, today announced the appointment of E. Yuri Hermida as the company's new Executive Vice President, Chief Growth & Strategy Officer. In this role, Hermida will be responsible for Consumer Insights & Innovation, Digital, Transformation, Media, New Business Ventures, and Strategy & Analytics. He will report directly to Bill Newlands, President and Chief Executive Officer, and will serve as a ...

A brief update from my last coverage on Constellation Brands (NYSE: STZ ) (NEOE: STZ:CA ). I gave a buy rating in July, and my key thesis was that STZ should continue to grow its earnings healthily I'm a passionate investor with a strong foundation in fundamental analysis and a keen eye for identifying undervalued companies with long-term growth potential. My investment approach is a blend of value investing principles and a focus on long-term growth. I believe in buying quality companies at a discount to t ...

Last week, Constellation Brands Inc. STZ reported second-quarter adjusted earnings per share of $4.32, beating the analyst consensus of $4.08. Quarterly revenues of $2.92 billion beat the street view of $2.90 billion. The company reported a loss per share of $6.59, including a $2.25 billion non-cash goodwill impairment loss for the Wine and Spirits business. BofA Securities downgraded Constellation Brands, reflecting lowered calendar year 2025 estimates amid slower beer volume growth. The analyst writes, "W ...

Core Viewpoint - Constellation Brands Inc (STZ) reported mixed financial results in its 10-Q filing, highlighting a modest increase in net sales but significant goodwill impairment in its Wine and Spirits segment, while maintaining a strong position in the beer market with a focus on premiumization and digital business acceleration [1][2]. Financial Performance - STZ reported net sales of $5,580.7 million for the six months ended August 31, 2024, up from $5,351.7 million the previous year, indicating a growth of approximately 4.3% [1]. - The company faced a goodwill impairment of $2,250.0 million in its Wine and Spirits segment, reflecting challenges in that market [1]. Strengths - STZ has a powerful portfolio of high-end beer brands, particularly Mexican imports like Modelo and Corona, which account for 80% of its sales and have driven a $108.9 million increase in beer net sales due to shipment volume growth [2]. - The company maintains a resilient balance sheet with retained earnings of $12,727.2 million as of August 31, 2024, supporting strategic investments and shareholder returns [2]. - STZ's strategic focus on premiumization and digital business acceleration, including the acquisition of the Sea Smoke wine business, enhances its competitive edge [2][5]. Weaknesses - The $2,250.0 million goodwill impairment in the Wine and Spirits segment indicates vulnerabilities, raising concerns about its future outlook [3]. - STZ's heavy reliance on its beer segment, particularly Mexican imports, poses a risk, as 80% of revenue comes from this category [3]. - Operational risks related to production disruptions and supply chain constraints are present, necessitating robust risk management strategies [3]. Opportunities - STZ can expand its market reach by capitalizing on international growth prospects and the rising demand for premium alcoholic beverages [4]. - The company's focus on innovation allows for the development of new products and line extensions, as seen with its investment in the Sea Smoke wine business and entry into the cannabis market [5]. - STZ's Digital Business Acceleration initiative positions it to enhance online presence and e-commerce capabilities, aligning with shifting consumer purchasing behaviors [5]. Threats - Global economic challenges, including inflation and supply chain disruptions, pose significant threats to STZ's cost structure and profitability [6]. - The beverage alcohol industry is highly regulated, and compliance with evolving regulations and ESG considerations requires ongoing investment [6]. - The competitive landscape necessitates continuous innovation and differentiation to maintain market position [6].

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Financial Data and Key Metrics Changes - The company achieved a 3% growth in enterprise net sales for Q2 fiscal 2025, while enterprise operating income decreased by 226% on a reported basis but increased by 13% on a comparable basis [14] - A non-cash goodwill impairment loss of $2.25 billion for the Wine and Spirits business impacted reported enterprise operating income [15] - The company reached a net leverage ratio of 2.9, slightly below the target of approximately three times [5] Business Line Data and Key Metrics Changes Beer Business - The Beer business net sales grew by 6%, driven by a 4.6% increase in shipment volume and favorable pricing [15][16] - Operating income for the Beer segment increased by 13%, with a 270 basis point increase in operating margin to 42.6% [20] - Beer depletions grew by 2.4%, marking the 58th consecutive quarter of growth [16] Wine and Spirits Business - Wine and Spirits shipments declined by 9.8% year-on-year, leading to a 12% decrease in net sales and a 13% decline in operating income [10][24] - The company expects full-year net sales and operating income declines of 4% to 6% and 16% to 18%, respectively, for the Wine and Spirits business [11] Market Data and Key Metrics Changes - The company maintained its leading share-gaining position in the U.S. beer market, outperforming the total beverage industry in dollar sales growth [13][64] - The Wine and Spirits business faced headwinds, particularly in lower-priced segments, affecting performance [9] Company Strategy and Development Direction - The company continues to focus on operational efficiency and cost savings, enabling incremental marketing investments in its largest beer brands [4][8] - A disciplined capital allocation strategy is in place, with nearly $250 million returned to shareholders through share repurchases in Q2 [5][13] - The company plans to continue tactical pricing and marketing support for its higher-end wine brands to improve performance [10][11] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing macroeconomic headwinds, particularly rising unemployment, impacting consumer demand [5][34] - Despite challenges, management remains optimistic about the back half of the fiscal year, expecting sequential improvements in the Wine and Spirits business [60][65] - The company anticipates Beer business net sales growth of 6% to 8% and operating income growth of 11% to 12% for fiscal 2025 [8][18] Other Important Information - The company will publish its annual ESG impact report in alignment with fiscal year-end materials [12] - Free cash flow for the first half of fiscal 2025 was $1.2 billion, a 12% increase from the prior period [27] Q&A Session Summary Question: Share repurchase strategy after hitting leverage target - Management indicated a continued opportunistic approach to share repurchases, with $2.2 billion authorization remaining [30] Question: Insights on softer beer depletions - Management attributed softer depletions to macro factors, including higher unemployment, and noted strong buy rates [34][35] Question: Impact of increased shelf space on Beer top line growth - Management confirmed double-digit share gains from spring resets and expects marketing investments to enhance results [38] Question: Performance of Corona brand - Management acknowledged a slight softness in Corona but expressed optimism due to upcoming marketing initiatives [41][42] Question: Timing of beer shipments and depletions - Management expects shipments and depletions to align more closely in the second half of the year, with historical patterns influencing performance [49] Question: Marketing plans for Wine and Spirits - Management emphasized a focus on operational improvements rather than acquisitions, with expectations for sequential improvement in the Wine and Spirits business [60] Question: Fair value and impairment of Wine and Spirits assets - Management clarified that the impairment was a non-cash accounting requirement and does not change the strategic outlook for the business [62]