Constellation Brands (STZ) Q3 2026 earnings summary

Executive summary

• Q3 FY26 net sales declined 10% year-over-year to $2.22B, mainly due to divestitures and lower shipment volumes, but only 2% on an organic basis; operating income fell 13% and net income attributable to shareholders dropped 18%.

• Beer Business gained dollar and volume share in U.S. tracked channels, with distribution growth and strong performance from Pacifico and Victoria, while returning nearly $1.4 billion to shareholders year-to-date.

• Operating environment remained challenged by inflation, economic uncertainty, and soft demand, especially among Hispanic consumers, but brand health and holiday sales were strong.

• Major divestitures in Wine & Spirits, including SVEDKA and 2025 Wine Divestitures, significantly impacted segment results.

• Focus remained on premiumization, cost optimization, and restructuring initiatives to drive long-term growth and margin improvement.

Financial highlights

• Q3 net sales were $2.22B (down 10% year-over-year); Beer segment net sales down 1% to $2.01B, Wine & Spirits net sales down 51% to $213M.

• Operating income was $692M (down 13%), comparable operating income was $739M (flat year-over-year); net income attributable to shareholders was $503M (down 18%).

• Gross margin for Beer segment was 52.9%; for Wine & Spirits, 49.8%; consolidated gross margin increased to 53.2%.

• Free cash flow reached $1.45B through Q3 FY26; operating cash flow for FY26 targeted at $2.5B–$2.6B.

• Dividend of $1.02 per share declared; $824M in share repurchases fiscal YTD.

Outlook and guidance

• FY26 comparable EPS guidance affirmed at $11.30–$11.60; reported EPS outlook updated to $9.72–$10.02.

• Beer net sales expected to decline 2–4%, operating income to decline 7–9%; Wine & Spirits organic net sales expected to decline 17–20%, operating income to decline 97–100%.

• Operating cash flow expected at $2.5B–$2.6B; free cash flow at $1.3B–$1.4B.

• More detailed guidance for FY 2027 and beyond will be provided in April, reflecting worsened macroeconomic conditions.

• Effective tax rate for fiscal 2026 projected at 17–19%.