Constellation Brands shares dropped on Friday after the company’s quarterly earnings missed expectations amid lower margins and rising marketing costs.
The stock closed down 5.79 percent at $218.87 after the spirits company reported an adjusted quarterly profit of $2.20 per share for its first fiscal quarter, below a Thomson Reuters consensus estimate of $2.43.
The Corona beer producer said higher freight costs as well as marketing investments raised expenses while the company promoted its new beers, Corona Premier and Corona Familiar. Freight costs coupled with a rising dollar reduced operating margins by 2.3 percent to 37.8 percent, according to the company’s report. Marketing expenses, meanwhile, rose 1.1 percent to 11 percent during the quarter.
“Our first quarter results are consistent with our expectations for the business and reflect planned investments in innovation for key brands, digital enablement, emerging opportunities and operational efficiencies,” said Chief Executive Officer Rob Sands. “We expect these investments to yield excellent returns well into the future.”
Constellation Brands, which also makes Robert Mondavi wine, also affirmed a full-year earnings forecast of $9.40 to $9.70 per share, below an estimate of $9.73.
The company’s fiscal first 2019 revenue beat expectations, however, totaling $2.05 billion versus an estimated $2.04 billion.
Constellation Brands’ stock has jumped about 14.5 percent over the past year, but has struggled in 2018. For the year, the shares are down 3.4 percent.