Constellation Brands (NYSE: STZ), the beverage giant behind popular beer labels such as Modelo and Corona, lowered its full-year fiscal 2026 guidance on Tuesday, citing a challenging macroeconomic backdrop and slowing consumer demand.
The announcement triggered a sharp sell-off, with shares falling about 7.3% and hitting its 52-week low.
Outlook reduced amid softer consumer demand
The company said comparable earnings per share are now expected to range between $11.30 and $11.60, down from its prior outlook of $12.60 to $12.90.
Management also revised its organic net sales forecast, anticipating a decline of 4% to 6%, compared with earlier guidance of a 1% increase to a 2% decline.
CEO Bill Newlands attributed the weaker outlook to a difficult operating environment.
“We continue to navigate a challenging macroeconomic environment that has dampened consumer demand and led to more volatile consumer purchasing behavior since our first quarter of fiscal 2026,” he said.
Newlands noted that high-end beer sales have slowed in recent months, with both trip frequency and average spend per trip declining.
Tariffs have compounded the problem. Earlier this year, Constellation warned that higher US tariffs on beer imports would impact its financial performance, and the latest guidance reflects those pressures.
Net beer sales are now expected to fall 2% to 4% due to lower volumes and additional tariff impacts. Previously, the company had projected flat to 3% growth.
Pressure in key demographics
Newlands highlighted that the sales pullback has been particularly acute among Hispanic consumers, a group that accounts for about half of Constellation’s US beer sales. “High-end beer sales for the population were more pronounced than general market declines,” he said.
Constellation has previously linked the trend to concerns among Hispanic consumers over immigration policies under President Donald Trump and fears about potential job losses.
The decline in demand from such a core demographic represents a significant headwind for the company’s portfolio of Mexican beer brands, which has historically outperformed the broader US beer market.
Despite these challenges, Constellation reaffirmed its commitment to long-term strategies aimed at strengthening brand equity and sustaining growth.
The company said it remains focused on distribution gains, disciplined innovation, and continued investment in its core labels.
Portfolio repositioning and shareholder returns
As part of efforts to bolster performance, Constellation has been reshaping its portfolio.
In April, the company divested its “mainstream” wine brands and Svedka vodka, a move designed to concentrate on higher-margin, premium beverages.
At the same time, Constellation authorized a $4 billion share repurchase program spanning three years.
On Tuesday, management said it had repurchased $604 million worth of shares during the first half of the fiscal year under this authorization.
The company also adjusted its free cash flow projection, cutting it to $1.3 billion to $1.4 billion from a prior range of $1.5 billion to $1.6 billion.
Constellation is scheduled to participate in the 2025 Barclays Global Consumer Staples Conference later on Tuesday, where investors may seek further clarity on how management plans to navigate weakening demand and regulatory pressures.
For now, the lowered guidance underscores the challenges facing even well-established consumer brands in an uncertain economic environment.
The post Constellation Brands sink 7% after cutting fiscal 2026 outlook weighed by tariffs appeared first on Invezz
