Constellation Brands Earnings Show Beer Resilience

Constellation Brands (STZ) reported Q3 fiscal 2026 results for the quarter ended Nov. 30, 2025, on Jan. 7, 2026, showing that steady beer sales and pricing helped stabilize results despite declines in consolidated sales and earnings per share (EPS). The company also updated its fiscal 2026 guidance.

Quarterly Results and Cash Flow

Constellation Brands posted consolidated net sales of $2.22 billion for the quarter, down 10% year over year; organic net sales declined 2%. Gross profit fell 8% to $1.18 billion. GAAP operating income dropped 13% to $692 million, with an operating margin of 31.1%, down from 32.2% a year earlier. Net income attributable to the company was $502.8 million, and diluted EPS was $2.88. Comparable operating income, which excludes certain items, totaled $739 million, reflecting strength in the beer segment offset by corporate expenses.

Year-to-date operating cash flow reached $2.1 billion, with free cash flow of $1.45 billion. The company declared a quarterly dividend of $1.02 per Class A share and $0.92 per Class 1 share. The earnings release was furnished as Exhibit 99.1 to an 8-K filed on Jan. 7, 2026.

Beer Segment Stability Amid Broader Declines

The beer segment remained the quarter’s stabilizing force, generating net sales of $2.01 billion, down just 1% year over year. Shipment volumes fell 2.2%, but favorable pricing partially offset the decline. The segment’s operating margin rose 10 basis points to 38.0%. Management attributed margin resilience to pricing and lower depreciation, though higher aluminum-related costs and unfavorable fixed-cost absorption from lower volumes partially offset gains.

In contrast, the Wine & Spirits segment saw net sales plunge 51% to $213.1 million, reflecting the impact of the SVEDKA divestiture and other 2025 wine divestitures that removed $202.6 million in net sales and $61.6 million in gross profit from the quarter’s results. Organic sales in this unit fell 7% year over year.

Updated Fiscal 2026 Guidance

For the fiscal year ending Feb. 28, 2026, Constellation Brands updated its reported diluted EPS guidance to a range of $9.72 to $10.02 and affirmed comparable EPS guidance of $11.30 to $11.60.

The company expects enterprise organic net sales to decline 4% to 6%, with beer net sales down 2% to 4% and Wine & Spirits organic sales falling 17% to 20%. It forecasts enterprise comparable operating income to decline 9% to 11% and beer operating income to fall 7% to 9%. Operating cash flow is targeted between $2.5 billion and $2.6 billion, with free cash flow expected between $1.3 billion and $1.4 billion. The outlook excludes divestiture impacts and is subject to risks and uncertainties. Non-GAAP reconciliations were provided.

“Net sales declined 1% driven by a 2.2% decline in shipment volumes, partially offset by favorable pricing,” the company said in the earnings release. Management will host an earnings call on Jan. 8, 2026.