Constellation Brands (STZ) Q1 2027 earnings summary

Executive summary

• Leadership transition with a new CEO and head of sales, focusing on leveraging brand strength, disciplined execution, and adapting strategies for both emerging and established brands.

• Net sales declined 3% year-over-year due to the 2025 Wine Divestitures, but organic net sales increased 3%, with Beer segment growth offsetting declines.

• Operating income rose 18% year-over-year, driven by gains on commodity derivatives, cost optimization, and lower asset impairment expenses.

• Net income attributable to shareholders increased 27% to $653.8 million, with diluted EPS up 31% to $3.79.

• Over $400 million was returned to shareholders via share repurchases and dividends.

Financial highlights

• Net sales: $2.43 billion, down 3% year-over-year reported, up 3% organic.

• Gross profit: $1.32 billion, up 4% year-over-year; gross margin improved to 54.3% from 50.4%.

• Operating income: $845 million, up 18% reported; comparable operating income: $834 million, up 6%.

• Net income attributable to shareholders: $653.8 million, up from $516.1 million year-over-year.

• Operating cash flow: $662 million, up 4%; free cash flow: $485 million, up 9%.

Outlook and guidance

• Fiscal 2027 reported EPS outlook raised to $11.50–$12.20; comparable EPS affirmed at $11.20–$11.90.

• Operating cash flow target: $2.4–$2.5 billion; free cash flow target: $1.6–$1.7 billion.

• Beer and Wine & Spirits organic net sales growth expected between -1% and +1%; Beer operating margin guidance 37–38%, Wine & Spirits 5–6%.

• FY 2027 beer net sales guidance maintained despite strong Q1 shipments, reflecting caution amid a dynamic consumer environment and macroeconomic uncertainty.

• Effective tax rate for fiscal 2027 expected to be 16–18%.