Constellation Brands (STZ) Q1 2026 earnings summary

Executive summary

• Net sales declined 6% year-over-year to $2.52 billion, with Beer down 2% and Wine and Spirits down 28%; operating income fell 24% and net income attributable to shareholders dropped 41%.

• Diluted EPS was $2.90 (down 39%), comparable EPS was $3.22 (down 10%); FY26 reported EPS outlook is $12.07–$12.37, comparable EPS outlook is $12.60–$12.90.

• Major divestitures completed, including mainstream wine brands and SVEDKA; Sea Smoke luxury wine business acquired.

• Restructuring initiative underway, targeting over $200 million in annualized cost savings by FY2028, with $13.3 million in pre-tax costs recognized in Q1 FY2026.

• Over $300 million returned to shareholders via share repurchases; quarterly dividend of $1.02 per share declared.

Financial highlights

• Q1 FY2026 net sales: $2.52 billion, down from $2.66 billion in Q1 FY2025; organic net sales down 4%.

• Operating income: $713.8 million, down from $941.6 million year-over-year; comparable operating income: $810 million, down 11%.

• Net income attributable to shareholders: $516.1 million, down from $877.0 million; adjusted net income: $573 million, down 12%.

• Gross margin for Beer was 53.1%; consolidated operating margin was 28.4%, down from 35.4% year-over-year.

• Free cash flow for Q1 FY26 was $444 million, up 41% year-over-year.

Outlook and guidance

• Fiscal 2026 reported EPS outlook updated to $12.07–$12.37; comparable EPS maintained at $12.60–$12.90.

• Operating cash flow target for fiscal 2026 is $2.7–$2.8 billion; free cash flow projected at $1.5–$1.6 billion.

• Beer segment expects net sales growth of 0–3% and operating income growth of 0–2% for fiscal 2026.

• Wine and Spirits expects organic net sales decline of 17–20% and operating income decline of 97–100%.

• Restructuring initiative expected to yield over $200 million in net annualized cost savings by FY2028.