USA: Boston Beer stock tumbles on lower Q2 net income

Boston Beer stock tumbled more than 23% in Friday, July 23rd’s session as the market for hard seltzers dealt a rude surprise to the brewer, knocking off its second-quarter earnings and forcing it to lower its forecast for the ongoing financial year.

Jim Koch, chairman and founder of the company, listed several factors behind the new paradigm in the seltzer market that led to the fall in earnings. He said the market has matured. The consumption of seltzers has moved to on-premise channels and new entrants have proliferated, leading to more choices for the consumer, according to Koch.

“We increased our production of Truly to meet our summer peak and have had lower than anticipated demand for certain Truly brand styles which has resulted in higher than planned inventory levels at our breweries and increased supply chain costs and complexity,” he said.

“Our outlook for the hard seltzer category in the second half of 2021 is uncertain and we have planned our capacity and spending based upon several volume scenarios.”

Net income for the second quarter was $59.2 million, a decrease of 1.6% from the same period last year. Earnings per diluted share was $4.75, a decrease of 2.7% and lower than the $6.69 projected by analysts.

Net revenue rose by a third to $602.81 million and came below analysts’ expectation of $665.25 million.

The company incurred much higher advertising and selling expenses due to investments in brands and more media spending.

The company now projects full year 2021 diluted EPS to be between $18 and $22, lower than the $22 to $26 range it gave in April.

26 July, 2021