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Investing.com -- Constellation Brands Inc. (NYSE:STZ) shares rose 3% in pre-market trading on Tuesday after the company posted quarterly earnings that beat analyst expectations despite weakness in its core beer business.
The maker of Modelo and Corona reported second-quarter earnings of $3.63 per share for the quarter ended August 31, above the Street’s estimate of $3.35. Revenue slipped 2% to $2.48 billion, slightly below the expected $2.51 billion.
Beer sales fell 7%, driven by an 8.7% drop in shipment volumes as distributors cut inventories and consumers pulled back on spending.
Operating margin for the beer segment declined 200 basis points to 40.6%, ahead of the 35% consensus, reflecting higher costs, including aluminum tariffs, offset by favorable pricing and $65 million in cost savings during the quarter, bringing half-year savings to $105 million.
Depletions varied across brands. Modelo Especial declined just over 4%, Corona Extra dropped slightly above 7%, and Modelo Chelada fell nearly 3%, partly offset by growth in Pacifico and Victoria.
Off-premise sales, which account for 90% of volume, fell 2.5%, while on-premise sales declined 3.9%, with the greatest weakness in zip codes with larger Hispanic populations.
Evercore ISI noted that these figures came in slightly ahead of Street expectations and reflected socioeconomic pressures on consumer demand along with distributor inventory rebalancing.
Constellation maintained its fiscal 2026 guidance, forecasting overall EPS of $11.30–$11.60, beer net sales to decline 2–4%, and beer operating income to fall 7–9%.
CEO Bill Newlands said the company remains focused on “distribution gains, disciplined innovation, and investing behind our brands,” while continuing to lead the U.S. beer industry in dollar share gains.
Other highlights included $298 million in share buybacks during the quarter (YTD $604 million) and net leverage of approximately 3x.
Evercore ISI said that the results came largely in line with expectations after the company lowered its outlook in early September, noting that monthly trends remained volatile, with temporary improvements in June and July followed by a sequential decline in August.