Shares of Constellation Brands (NYSE: STZ) were up 1.7% in afternoon hours on Thursday after the company reported strong quarterly results a day ago. The company beat revenue and earnings estimates for the third quarter of 2020 and raised its guidance for the full year.
Revenue inched up 1% to $2 billion while comparable EPS fell 10% to $2.14. Sales in the Beer division increased 8.3% year-over-year to $1.31 billion. On its quarterly conference call, Constellation stated that the Modelo Especial brand saw depletion growth of 15% along with double-digit growth in 46 out of 50 states.
During the quarter, the Corona brand family grew around 7% in IRI channels aided by strength in Corona Premier, Corona Refresca and Corona Extra. Corona Premier posted double-digit depletion growth in 35 states.
Constellation plans to launch Corona Hard Seltzer this spring and this move is expected to help solidify the company’s leadership position in the high end of the US beer segment. Corona Hard Seltzer will be introduced in four flavors, including tropical lime, mango, cherry and blackberry lime.
Net sales in the Wine and Spirits division dropped 9.7% to around $689 million. Constellation expects the revised agreement with Gallo to lead to accelerated growth and margin performance in the segment.
The company also believes it will address the concerns of the FTC by excluding the sparkling wine, brandy, dessert wines and concentrate categories from the transaction. Constellation is looking at opportunities to divest most of the brands in these categories in order to optimize its portfolio.
Constellation is seeing upward progression in revenue for its Power Brands and expects mid-single digit sales growth for this collection of brands in the fourth quarter.
For fiscal year 2020, Constellation expects reported EPS of $0.95-1.05 and comparable EPS, excluding Canopy, of $9.45-9.55.