DOW JONES NEWSWIRES
Constellation Brands Inc.'s (STZ) fiscal fourth-quarter net loss
narrowed amid lower restructuring and other charges and improved
margins. The alcoholic beverages maker forecast earnings for the
current fiscal year in line with latest Wall Street estimates.
While the company has been considered recession resistant, it
hasn't necessarily been recession proof, and Constellation lowered
its forecasts last month for the fiscal year just ended. It also
predicted lower earnings for the current fiscal year, without
giving details. Analysts, at the time, had been expecting an
increase.
The company, which produces Robert Mondavi wines, and other
brands, in late March gave a glimpse of cost-cutting plans, which
include eliminating 5% of its global work force of 9,000 people.
Wednesday, the company said it is aiming to save $25 million in the
just-started fiscal year and more than $50 million by the end of
the following year. Constellation expects to take a total of $112
million in charges, with the majority incurred in 2010.
For the quarter ended Feb. 28, the biggest global wine maker by
volume reported a net loss of $406.8 million, or $1.88 a Class A
share, compared with a prior-year net loss of $834.8 million, or
$3.91 a share.
The latest period included $468 million in restructuring costs
and other charges, mostly related to a decline in its U.K. and
Australian businesses. Prior year included $888 million in
restructuring-related and other charges.
Net sales, which exclude excise taxes, decreased 17% to $735
million.
Analysts polled by Thomson Reuters most recently were looking
for earnings of 22 cents on revenue of $791 billion.
Gross margin fell to 26% from 35.2%.
The company has been shifting its focus to higher-priced
products, where most of the growth has been in the alcoholic
beverages industry in recent years.
Branded wine sales, which represent the bulk of its earnings,
fell 4% amid a sharp decline in demand in Europe. Spirits sales
increased 6%, driven by the growth of Svedka vodka brand.
For the just started fiscal year, the company expects per-share
earnings of $1.60 to $1.70, in line with analysts' views for
$1.65.
Shares closed at $11.64 and didn't trade premarket.
-By Tess Stynes and Katherine E. Wegert, Dow Jones Newswires;
201-938-2473; tess.stynes@dowjones.com