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Constellation Brands (STZ) Q3 earnings

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A employee stacks cases of Constellation Brands’ Corona beer for delivery on the Euclid Beverage LLC warehouse in Peru, Illinois.

Daniel Acker | Bloomberg | Getty Images

Shares of Constellation Brands fell Thursday after the wine, beer and spirits company reported ongoing supply chain costs that offset sales growth in its beer category.

The stock closed down nearly 9% Thursday.

The corporate, which makes Corona beer and Svedka vodka, also lowered its earnings out search for the fiscal yr. Constellation said it now projects earnings of $11 to $11.20 per share for the yr, down from its previous guidance of $11.20 to $11.60 per share. 

For the three months ended Nov. 30, Constellation’s beer segment posted year-over-year net sales growth of 8%, driven by continued growth of its Modelo Especial and Modelo Chelada brands.

Nevertheless, the corporate cited higher costs from raw materials, packaging and logistics, brewery expansions and marketing, which offset beer sales growth.

In a conference call with analysts Tuesday morning, Chief Executive Officer Bill Newlands added that a “recent series of headwinds” hit the corporate’s beer business towards the top of its fiscal third quarter, including poor weather and economic conditions in California.

Its operating margin within the beer business decreased in the course of the quarter to 37.5% from 41.3% a yr earlier.

The corporate said it plans to proceed price increases on its beer products to match higher operating costs plaguing its supply chain.

For its third quarter, Constellation’s over net income fell to $467.7 million, or $2.52 a share, from $470.8 million, or $2.48 a share, from a yr ago.

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