Beer-maker Constellation Brands (STZ) reported an earnings miss, in spite of beating sales expectations for the first quarter of fiscal 2019. Net sales came in at $2.04 billion, an increase of 6% year-over-year, while earnings on a reported basis were at $3.77 per share, up 90%. However, earnings on a comparable basis declined 5% to $2.20 per share.
The company said that its new Corona Premier and Familiar roll-outs drove strong Beer depletion growth of 9%. On the contrary, Wine and Spirits business continued its declining trend with sales dropping 2.9% and volumes dipping 2.9%.
For fiscal year 2018, company had reported a 10% sales increase in its most revenue generating Beer segment. The Constellation Brands management has been pushing hard to keep up with the demand for its beer products by adding more innovative products and increasing store locations. Looking forward, company’s beer business continues to target high-single digit volume growth and 9% to 11% net sales and operating income growth for fiscal 2019.
In the Wine and Spirits segment, net sales were hurt by the overlap of strong shipment volume in the year-ago quarter, driven by replenishment of Meiomi supply, which got constrained coming into the year-ago first quarter. For full-year 2019, Constellation Brands expects this segment to deliver net sales and operating income growth in the range of 2% to 4%.
On a reported basis, the company increased its fiscal 2019 reported earnings outlook to $10.93 to $11.23 per share and maintained guidance for earnings on a comparable basis at $9.40 to $9.70 per share. Also, for the fiscal 2019, Constellation Brands affirmed its operating cash flow target of about $2.45 billion and free cash flow projection of $1.2 billion to $1.3 billion.
Constellation Brand’s stock gained over 18% year-over-year, while increasing more than 6% from the beginning of 2018. However, the stock plunged more than 4% following the earnings on dismal earnings performance.