Constellation Brands Inc. fell short of estimates on Wall Street for its revenue in the third quarter, the wine and spirits makers said Friday. The company added that sales from wine and spirits for the full year would end at the lower end of its previous forecast. The news helped send shares down by up to 4%.
Shares were able to recoup some of their losses later on Friday, after CEO Robert Sands announced that the company did not see any impact on sales of alcohol in six states where marijuana has become legalized for recreational use.
Those comments come just two months from a statement made by Constellation that it took close to a 10% stake in the largest cannabis producer in Canada Canopy Growth becoming the first big beer and spirits company to make an investment in legalized cannabis.
The CEO said it was too early to determine if the investment by Constellation with the Canadian company would become complementary or cannibalistic. He added that not enough data is available to say how it would affect the beverages and alcohol overall moving ahead.
The spirits company announced a share buyback program of $3 billion and raised its profit forecast for the full year.
Shares of Constellation are up more than 50% over the last year, but in late Friday trading were down 1.9%.
Spirit and wins sales, which represent just less than 50% of the total revenue for Constellation, were down 10.3% during the third quarter, hurt by hurricanes in both Texas and Florida, wildfires in different areas of California, and a fall in the demand from its retail customers.
The drop in sales reflects the divesture of its Canadian wine business during December of 2016. The company added that it is now expecting sales of its wine and spirits, which includes Svedka Vodka, and Robert Mondavi wines, to fall at its lower end of a forecast previously released that had already included a drop of between 4% and 6% for the year.
Beer sales, which are the biggest business the company has, rose by 8% during the quarter.
Net income was up to $491.1 million equal to $2.44 a share for the quarter ending November 30, in comparison to $405.9 million equal to $1.98 a share for the same period one year ago.
Excluding one-off items, earnings were $2.00 a share which beats estimates by analysts of $1.89 a share. Net sales dropped from $1.81 billion to $1.80 billion and missed estimates of $1.87 billion.