Constellation Brands (NYSE: STZ) reported its fiscal 2026 first-quarter earnings, showing resilient beer sales and a strategic reshaping of its wine and spirits portfolio, despite overall declines in revenue and profit.
Q1 performance highlights
In the quarter ending May 31, 2025, Constellation Brands posted net sales of $2.515 billion, a 6% decrease year-over-year. Operating income fell 24% to $714 million, while net income attributable to CBI dropped 41% to $516 million. Diluted earnings per share (EPS) came in at $2.90, down from $4.78 in the same quarter last year.
However, comparable EPS, which excludes certain divestitures and one-time costs, was $3.22—a 10% drop compared to Q1 FY25.
Beer business leads growth
The company’s beer segment continued to outperform the broader market, gaining U.S. dollar share and claiming six of the top 15 dollar share-gaining brands according to Circana U.S. tracked channels.
Key highlights include:
- Net sales of $2.23 billion (down 2%)
- Operating income of $873 million (down 5%)
- Pacifico grew over 13% in volume
- Modelo Especial remained the #1 U.S. beer brand by dollar sales
Marketing investments and aluminum tariffs impacted margins, but strong brand health and pricing discipline supported category leadership.
Strategic wine divestitures complete
Constellation finalized its 2025 Wine Divestitures in June, exiting lower-margin segments to focus exclusively on premium and high-growth wine and spirits. As a result:
- Wine and spirits net sales fell 28% to $280.5 million
- Operating income swung to a loss of $6 million
- Organic depletions from the remaining portfolio rose approximately 2%
The revamped portfolio includes brands like The Prisoner Wine Company and High West Whiskey, positioned to benefit from premiumization trends.
Capital discipline and shareholder returns
Constellation generated $637 million in operating cash flow and $444 million in free cash flow during the quarter. The company repurchased $381 million in shares and declared a quarterly dividend of $1.02 per share for Class A common stock.
FY26 guidance remains unchanged:
- Comparable EPS: $12.60 to $12.90
- Operating cash flow: $2.7–$2.8 billion
- Free cash flow: $1.5–$1.6 billion
What’s next
Despite macroeconomic headwinds impacting consumer demand, Constellation Brands is leaning on brand strength, operational discipline, and a sharpened focus on high-margin categories. Its leadership in U.S. beer sales and the completion of its wine portfolio transformation position the company for long-term growth.
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