01—Abstract
Summary
Summary of the 8-K filed September 2, 2025. Cited figures are marked; the original filing is the authoritative source.
Constellation Brands, Inc. (NYSE: STZ) issued a news release on September 2, 2025 reporting results for its second fiscal quarter ended August 31, 2025 and updating its fiscal 2026 outlook (Exhibit 99.1), and furnished presentation materials for investor meetings (Exhibit 99.2).
The company lowered its fiscal 2026 guidance: reported EPS is now $10.77 to $11.07a (prior $12.07 to $12.37) and comparable EPS is $11.30 to $11.60 (prior $12.60 to $12.90). Management attributes the change to incremental macroeconomic headwinds affecting consumer demand, with high-end beer buy rates decelerating sequentially and declining more sharply among Hispanic consumers. The updated outlook calls for Enterprise organic net sales to decline (6)% to (4)% (prior (2)% to 1%), Beer net sales to decline (4)% to (2)% (prior 0% to 3%), and comparable Enterprise operating income to decline (11)% to (9)% (prior (3)% to (1)%).
Beer operating income is now expected to decline (9)% to (7)%, citing lower volumes, operating deleveraging and additional tariffs. Operating cash flow is guided to $2.5 to $2.6 billionb (prior $2.7 to $2.8 billion) and free cash flow to $1.3 to $1.4 billion (prior $1.5 to $1.6 billion), with capital expenditures unchanged at about $1.2 billion. Management also said that distributor inventory rebalancing is occurring earlier than typical, so shipments in the second quarter are expected to trail depletions by 6.0 to 7.0 points.
Through the first half of the year, the company had repurchased $604 millionc of shares under its three-year $4 billion authorization. The filing notes the outlook reflects the SVEDKA Divestiture and 2025 Wine Divestitures, which excluded $711 million of net sales and $245 million of gross profit less marketing from year-over-year results.
02—Key points
Key Highlights
- Reported EPS guidance lowered to $10.77 to $11.07 from $12.07 to $12.37; comparable EPS guidance lowered to $11.30 to $11.60 from $12.60 to $12.90.
- Enterprise organic net sales now expected to decline (6)% to (4)%, versus prior guidance of (2)% to 1%, driven by incremental macroeconomic headwinds affecting consumer demand.
- Beer net sales now expected to decline (4)% to (2)% (prior 0% to 3%); Beer operating income now expected to decline (9)% to (7)% (prior 0% to 2%) on lower volumes, operating deleveraging and additional tariffs.
- Comparable Enterprise operating income now expected to decline (11)% to (9)% (prior (3)% to (1)%).
- Operating cash flow guidance cut to $2.5 to $2.6 billion (from $2.7 to $2.8 billion) and free cash flow to $1.3 to $1.4 billion (from $1.5 to $1.6 billion); capital expenditures unchanged at about $1.2 billion.
- Through the first half of fiscal 2026, the company executed $604 million in share repurchases under its $4 billion three-year authorization, and Beer maintained volume share gains in 49 of 50 states through July.
03—Questions
Frequently Asked Questions
Why did Constellation Brands lower its fiscal 2026 outlook?
Management cited a challenging macroeconomic environment that has dampened consumer demand and led to more volatile purchasing behavior. High-end beer buy rates decelerated sequentially, with trip frequency and spend per trip declining, and declines were more pronounced among Hispanic consumers. The company also cited additional tariffs and operating deleveraging for Beer.
What is the revised EPS guidance?
Reported diluted EPS is now expected at $10.77 to $11.07, down from $12.07 to $12.37. Comparable EPS is now expected at $11.30 to $11.60, down from $12.60 to $12.90, on about 176 million weighted average diluted shares outstanding.
How is the company's cash generation expected to change?
Operating cash flow guidance was lowered to $2.5 to $2.6 billion from $2.7 to $2.8 billion, and free cash flow guidance was lowered to $1.3 to $1.4 billion from $1.5 to $1.6 billion. Capital expenditures are unchanged at about $1.2 billion.
What did management say about distributor inventory and second-quarter shipments?
Management expects distributor-level inventory rebalancing to occur earlier than typical for its Beer Business, reflecting softer consumer trends. As a result, second-quarter shipment change is expected to trail depletion change by 6.0 to 7.0 points, and shipment volume is expected to generally align with depletion volume for the second half of the fiscal year.
Is the company continuing to return capital to shareholders?
Yes. The CFO stated that the company remains committed to its dividend and share repurchase programs and has executed $604 million in share repurchases through the first half of fiscal 2026 under its three-year $4 billion authorization, with share counts inclusive of repurchases through August 2025.
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