Constellation Brands (STZ) Q2 2026 earnings summary

Executive summary

• Q2 FY26 saw net sales decline 15% year-over-year, driven by divestitures in Wine & Spirits and lower Beer shipments, but reported EPS rebounded to $2.65 and comparable EPS to $3.63, with strong cash flow and continued share repurchases.

• Achieved $1.5B in year-to-date operating cash flow and $1.1B in free cash flow, returning over $600M to shareholders via dividends and share repurchases.

• Beer business led U.S. dollar share gains, with Modelo Especial remaining the #1 U.S. beer brand; Wine & Spirits outperformed the higher-end wine segment despite divestitures.

• Navigated a challenging macroeconomic environment, with consumer sentiment and spending constrained, especially among Hispanic consumers.

• Outperformed the beverage alcohol industry by just over 1% in the quarter, despite year-over-year declines in enterprise net sales.

Financial highlights

• Q2 FY26 net sales were $2.48B, down 15% year-over-year; organic net sales declined 8%.

• Q2 reported operating income was $874M (up 171% due to prior-year goodwill impairment); comparable operating income was $886M, down 13%.

• Net income attributable to shareholders was $466M, compared to a loss of $1.2B in the prior year; comparable net income was $638M, down 19%.

• Gross margin for Beer was 52.9% (down from 54.0%); for Wine & Spirits, 40.3% (down from 42.2%).

• Free cash flow for the first half was $1.08B, with a full-year target of $1.3–$1.4B.

Outlook and guidance

• FY26 comparable EPS guidance is $11.30–$11.60; reported EPS outlook is $9.86–$10.16.

• Organic net sales expected to decline 4–6% for the enterprise, 2–4% for Beer, and 17–20% for Wine & Spirits.

• Operating cash flow guidance of $2.5–$2.6B; free cash flow of $1.3–$1.4B; capital expenditures expected at ~$1.2B, mostly for Mexico beer operations.

• Beer operating income expected to decline 7–9%; Wine & Spirits operating income to decline 97–100%.

• Effective tax rate for FY26 expected at 17–19%, reflecting new tax legislation impacts.