Earnings
Sobering Sales? Constellation Brands Soars
Jeanine Poggi
07/01/09 - 11:09 AM EDT
Shoppers are apparently turning away from pricey wines and spirits to get their alcohol fix on the cheap.
As a result of this somewhat sobering trend, Constellation Brands(STZ Quote) posted an 85% plunge in first-quarter earnings, and announced that it is concentrating on brands that appeal to the budget-conscious consumer.
Still, the maker of Robert Mondavi wines and Svedka brand vodka beat Wall Street's expectations, sending shares soaring nearly 12% in morning trading to $14.17.
The company earned $6.5 million during the quarter, or 3 cents a share, compared with $44.6 million, or 20 cents, in the year-ago period.
Minus restructuring charges, its profit was actually 33 cents, beating analysts' forecast by a penny.
Sales dropped 15% to $791.6 million from $931.8 million. Sales of its spirits tumbled 43% to $60.1 million, while branded wine sales fell 10% to $687.9 million.
With dismal sales like these, the company announced that it is turning to value-priced brands like Woodbridge by Robert Mondavi, Nobilo, Clos du Bois, Kim Crawford and Svedka.
Constellation reaffirmed its full-year outlook in the range of $1.60 to $1.70 a share.