Constellation Brands 2026 Q1 Earnings Misses Targets as Net Income Falls 41.3%

Constellation Brands (STZ) reported its fiscal 2026 Q1 earnings on Jul 02nd, 2025. The beverage giant saw a significant decline in financial performance, with revenue falling short of expectations and net income experiencing a steep drop compared to the previous year. The company's guidance remained in line with prior expectations, despite the challenges posed by tariffs and consumer demand fluctuations.

The total revenue of Constellation Brands decreased by 5.5% in 2026 Q1 to $2.52 billion, down from $2.66 billion in 2025 Q1. The beer segment led the revenue generation with $2.23 billion, while the wine and spirits division accounted for $280.50 million. Within this division, wine contributed $258.50 million and spirits added $22 million, culminating in consolidated net sales of $2.52 billion.

Constellation Brands's EPS declined 39.6% to $2.90 in 2026 Q1 from $4.80 in 2025 Q1. Meanwhile, the company's net income fell to $523.80 million in 2026 Q1, marking a 41.3% decrease from $892.80 million reported in 2025 Q1. The EPS decline signals a challenging quarter for the company.

The strategy of buying Constellation Brands (STZ) shares after a quarterly revenue drop on the financial report release date and holding for 30 days resulted in poor performance. The strategy's CAGR was -2.40%, with an excess return of -101.49% and an overall return of -11.36%. The strategy significantly underperformed the benchmark and faced a high maximum drawdown of -43.22%, indicating significant risk. Investors who followed this approach saw substantial losses, reflecting the volatility and challenges faced by the company during this period.

William A. Newlands, President, CEO & Director, emphasized that Constellation Brands performed as expected in Q1 2026, facing ongoing consumer concerns but maintaining strong loyalty among target demographics. He noted the results were against a strong prior year and indicated a need for sequential improvement to meet guidance. Newlands highlighted continued investment in marketing and brand health, focusing on high-impact events. He expressed confidence in leveraging easier comparisons as summer progresses, stating, “our loyalty remains strong,” reinforcing the importance of controlling operable factors amidst evolving macroeconomic conditions.

Constellation Brands affirmed its full-year Beer revenue growth outlook and margin guidance, with expectations for gradual sequential improvement in volume as the company moves into summer. Newlands indicated that the impact of recently implemented tariffs would be approximately $20 million, predicting a 20 basis point hit to margins but remaining confident in delivering profitability in line with prior expectations. The company projects continued strong performance in key brands, particularly with Pacifico and Sunbrew, supporting the broader growth strategy moving forward.

Constellation Brands has announced plans to redeem $900 million in outstanding senior notes ahead of maturity, including 4.75% Senior Notes due 2025 and 5.00% Senior Notes due 2026. The redemption demonstrates the company's proactive approach to managing financial obligations. Additionally, the company closed a wine transaction with The Wine Group to focus on a portfolio of higher-growth, higher-margin brands, showcasing its strategic shift towards more profitable ventures. Amid these financial maneuvers, Constellation Brands continues to face challenges due to socioeconomic headwinds impacting beer sales, particularly amid immigration crackdowns.