Constellation Brands CEO Sees High End Of Profit Guidance If September Trends Hold
Nick Fink said only a reversal in trends would put the $11.20 to $11.90 earnings range's low end in play, and the company has $2.5 billion left to buy back.
Constellation Brands CEO Nick Fink said on the company's second-quarter earnings call that the brewer expects to finish at the high end of its $11.20 to $11.90 a share comparable earnings guidance if September's trends continue. He told analysts the quarter beat the company's own expectations.
What Fink said on the call
Fink reiterated the fiscal 2027 guidance in his opening remarks. An analyst with RBC Capital Markets then pressed him on whether September's improvement was simply Labor Day timing, and noted that most investors were positioned around the middle to lower part of the range.
Fink conceded the holiday shifted sales between August and September, but said an extra selling day in the second quarter largely offset it. "Think of Q2 as neutral," he said, adding that the company saw acceleration in September unrelated to timing as college football and other programming began.
He said it would take "a real reversal in trends" for the company to contemplate the low end of the range, and that nothing on the top line or bottom line pointed that way. He added that the company still intends to be prudent in its forecasts.
Chief Financial Officer Garth Hankinson said that even without the extra shipments used to rebuild distributor inventories, the company would have come in above its expectations for the quarter.
Inventory, shipments and depletions
An analyst with Bank of America said that by their math the company shipped about 8 million more cases than distributors sold through in the first half, and asked whether that would unwind in the second half.
Fink said distributor inventories are healthy but still below historical averages. He described fiscal 2026 as an overcorrection that left the company entering fiscal 2027 too light, which created channel inefficiencies and forced it to ship more to clear order backlogs and avoid out-of-stocks.
He expects the second half to look normal, and for the full year, shipments and depletions to "track within 99% of each other."
Brands, costs and the seltzer push
Fink said the company was the top share gainer in beverage alcohol in the quarter, and that Pacifico became a top-10 beer brand, growing at about 20% year to date. He said Corona's non-alcoholic line ranks third, and called spiked seltzer the hottest subcategory, where the company holds a leading position.
Fink put cost savings at about $600 million since Investor Day and said he wants a multi-year continuous-improvement program. Hankinson said more savings are coming as the company moves, in his words, from a builder to an operator.
Hankinson also said $2.5 billion remains on the share repurchase authorization running through fiscal 2028, after $530 million of buybacks so far this year.
What to watch
Fink tied the high-end outlook to September's pace continuing through football season. Third-quarter marketing spending above 11% of net sales is the other test of whether the increased marketing push keeps working.
The guidance range is unchanged; what moved is Fink's stated lean toward the top of it, conditional on September's pace holding.
Sources
- Constellation Brands Reports Second Quarter Fiscal 2027 Financial Results | Financial Post — financialpost.com
- Constellation Brands Q2 Adj. EPS $3.74 Beats ... — benzinga.com
- https://www.wsj.com/business/retail/constellation-brands-profit-rises-on-higher-beer-spirits-sales-872e0481 — The Wall Street Journal
- Constellation Brands’s (NYSE:STZ) Q3 CY2026: Beats On Revenue But Stock Drops On Weak Guidance — Yahoo Finance
- Constellation Brands Raises FY2027 GAAP EPS G... — benzinga.com
