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(Reuters) -Constellation Brands cut its annual sales and profit forecasts after weak consumer spending on its Modelo Oro and Corona Light beers pulled third-quarter results below estimates, taking its shares down 14% on Friday.
Lower-income consumers in the U.S., earning $50,000 or less, have traded down to smaller pack sizes of beer and cheaper alternatives, hurting sales at Constellation while the company attempts to turn around its struggling wine and spirits business towards a more premium collection.
"Given near-term uncertainty on when consumers will revert to more normalized spending, we have prudently lowered our growth outlook," CEO Bill Newlands said in a statement.
The company now expects annual net sales to grow 2% to 5%, compared with its previous forecast of 4% to 6% growth.
Constellation lowered its annual sales expectations for beer, its major revenue driver, after reporting a 3.2% rise in quarterly depletion growth, or the rate at which products are sold, compared with an 8.2% growth last year.
The company now expects annual beer sales to grow between 4% and 7%, from a prior forecast of 6% to 8% growth.
"Without any catalysts on the horizon until peak summer season hits in 6 months time, we think investors should remain on the sidelines until the story becomes interesting again," said Truist Securities analyst Bill Chappell.
Constellation also cut its adjusted profit per share for fiscal 2025 to between $13.40 and $13.80, from $13.60 to $13.80 expected earlier.
The company's third-quarter net sales of $2.46 billion missed estimates of $2.53 billion, according to data compiled by LSEG.
Excluding one-time items, earnings per share of $3.25 were also below estimates of $3.31 per share.
Last week, Constellation's stock dipped along with other liquor makers, after the U.S. Surgeon General said alcoholic drinks should carry a warning about cancer risks on their label, signaling more tobacco-style regulations.
(Reporting by Neil J Kanatt and Juveria Tabassum in Bengaluru; Editing by Anil D'Silva and Devika Syamnath)