Constellation Brands (STZ) Q1 2026 earnings

Introduction to Constellation Brands’ Quarterly Earnings

Constellation Brands on Tuesday reported quarterly earnings and revenue that missed analysts’ estimates as tariffs on aluminum weighed on its profitability. Still, the brewer reiterated its forecast for fiscal 2026, showing confidence that it can hit its financial targets despite the weaker-than-expected quarterly performance and higher tariffs.

Quarterly Earnings Report

The report, which covers the three months ended May 31, includes the start of Trump’s tariffs on canned beer imports in early April. He also hiked trade duties on aluminum to 25% in mid-March and to 50% in early June. Both imported beer and aluminum are crucial to Constellation’s beer business, which accounts for roughly 80% of the company’s overall revenue. Constellation’s beer portfolio only includes Mexican imports, like Corona, Pacifico and Modelo Especial, which overtook Bud Light as the top-selling beer brand in the U.S. two years ago.

Financial Highlights

Constellation reported fiscal first-quarter net income of $516.1 million, or $2.90 per share, down from $877 million, or $4.78 per share, a year earlier. Constellation’s operating margin fell 150 basis points, or 1.5%, in the quarter, in part driven by higher aluminum costs. Excluding items, the brewer earned $3.22 per share. Net sales dropped 5.8% to $2.52 billion, fueled by weaker demand for its beer and the company’s divestiture of Svedka vodka.

Company Performance

Constellation is still facing softer consumer demand, CEO Bill Newlands said in a statement. He attributed the weaker sales to "non-structural socioeconomic factors." Constellation’s beer business saw shipment volumes fall 3.3%, caused by weaker consumer demand. Last quarter, Newlands said Hispanic consumers were buying less of the company’s beer because of fears over Trump’s immigration policy. Roughly half of Constellation’s beer sales come from Hispanic consumers, according to the company.

Outlook for Fiscal 2026

For fiscal 2026, Constellation continues to expect comparable earnings per share of $12.60 to $12.90. The company is projecting that organic net sales will range from declining 2% to rising 1%. Shares of the company fell less than 1% in extended trading. The stock has shed more than 20% of its value this year, fueled by concerns about how the higher duties imposed by President Donald Trump would affect demand for its beer.

Conclusion

In conclusion, Constellation Brands’ quarterly earnings report showed a decline in net income and revenue due to higher tariffs on aluminum and weaker consumer demand. Despite this, the company remains confident in its ability to meet its financial targets for fiscal 2026. The impact of tariffs on the company’s beer business and the decline in sales due to socioeconomic factors are key challenges that Constellation needs to address in the coming quarters.

FAQs

Q: What was the main reason for Constellation Brands’ decline in quarterly earnings?
A: The main reason for the decline was the higher tariffs on aluminum imposed by President Donald Trump, which weighed on the company’s profitability.
Q: How did the tariffs on aluminum affect Constellation’s beer business?
A: The tariffs on aluminum increased the cost of production for Constellation’s beer business, which accounts for roughly 80% of the company’s overall revenue.
Q: What is Constellation’s outlook for fiscal 2026?
A: Constellation expects comparable earnings per share of $12.60 to $12.90 and organic net sales to range from declining 2% to rising 1% for fiscal 2026.
Q: How have Constellation’s shares performed this year?
A: Constellation’s shares have shed more than 20% of their value this year, fueled by concerns about the impact of higher duties on demand for its beer.
Q: What is the significance of Hispanic consumers to Constellation’s beer sales?
A: Roughly half of Constellation’s beer sales come from Hispanic consumers, who have been buying less of the company’s beer due to fears over Trump’s immigration policy.