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To: richardred who wrote (1704)	7/1/2007 1:50:32 PM
From: richardred	Respond to of 7259

Constellation Brands profit tops estimates Thursday June 28, 9:10 am ET By Martinne Geller NEW YORK (Reuters) - Constellation Brands Inc. (NYSE:STZ - News) posted quarterly profit far above Wall Street estimates on Thursday, as its plan to cut the amount of wine it ships to U.S. distributors did not hurt sales as much as expected. The owner of Robert Mondavi, Vendage and Ravenswood wines also said its Chief Executive Officer Richard Sands was stepping down, to be replaced by his brother, Robert Sands, currently the company's chief operating officer. Richard Sands, 56, will remain chairman of the board. Constellation, which also imports Corona Extra, St. Pauli Girl and Tsingtao beers, posted net income of $29.8 million, or 13 cents per share, for the fiscal first quarter that ended May 31, compared with $85.5 million, or 36 cents per share, a year ago. Excluding items, Constellation said it earned 21 cents per share, topping analysts' average estimate of 15 cents per share, according to Reuters Estimates. Analysts' estimates ranged from 13 cents to 18 cents per share. Quarterly net sales were $901.2 million, down from $1.16 billion a year ago, hurt by a change in the way Constellation accounts for sales from its Crown Imports and Matthew Clark joint ventures and a 13-percent drop in North American wine sales due to a plan to lower distributor inventory levels. But the plan's sales impact was much less than one analyst was expecting, after the company forecast that two thirds of the $160 million to $190 million sales reduction would occur in the first quarter, with the remaining third falling in the second quarter. "One of the biggest upside drivers (to the earnings) appears to be that Constellation did not deload as much of the planned inventory in the first quarter as expected," wrote Morgan Stanley analyst William Pecoriello in a research note. Pecoriello said he was expecting North American wine sales to fall 31 percent. Sales of spirits, which include Effen vodka, 99 Schnapps, and Ridgemont Reserve 1792 bourbon, rose 16 percent, helped by the acquisition of SVEDKA Vodka. The company affirmed its full-year outlook for earnings per share in the range of $1.30 to $1.40, excluding items. "The fact that the company did not change its full year sales forecast or earnings guidance leads us to believe that more of the (wine inventory deload) will fall in the second quarter than previously expected/guided," Pecoriello said. Constellation has been struggling with its business in Britain, as an oversupply of grapes from Australia has flooded the market with inexpensive wine, hurting prices. To lessen the blow, the company has said it is looking to other so-called "New World" wine markets, including the Unites States and New Zealand. "In North America, the wine market remains healthy," said CEO Richard Sands in a statement. "Consumer demand is strong and they continue to trade up to premium and luxury wines, with Woodbridge by Robert Mondavi, Toasted Head, Blackstone, Estancia and Simi as examples of our brands that have been benefiting from this trend." Constellation shares, which have gained nearly 18 percent over the last three months, currently trade at 17.6 times earnings estimates for the current fiscal year, according to Reuters data. biz.yahoo.com