Boston Beer Cuts Annual Guidance on Lower Volumes
July 21 2016 - 6:30PM
Dow Jones News
Boston Beer Co., the maker of Samuel Adams Boston Lager, warned
it would cut costs to adjust to lower volumes, and it further
reduced its projections for the year, citing continued weakness of
its brand.
The company, which has now reported three consecutive quarters
of sales and profit declines, now projects shipments and
depletions, or sales by distributors to retailers, to remain flat
from the year earlier or fall as much as 4%, compared with its
earlier view of a 4% decline to a 2% increase.
Meanwhile, the company now expects to earn $6.40 to $7 a share,
down from its earlier view of $6.50 to $7.30 for the year.
Still, shares—which are down 18% this year—rose 2.6% to $169 in
after-hours trading Thursday as the company's financial results
were better than expected.
Without giving specifics, Chief Executive Martin Roper referred
in a news release to an increased "focus and urgency on cost
savings" given the lower volume projections and said company
officials are "evaluating all our opportunities to better fit the
current volume environment."
For the latest quarter, Boston Beer's core shipment volume fell
4% to 1.1 million barrels, driven by declines in Samuel Adams,
Angry Orchard and Traveler brands. The company reported a profit of
$26.6 million, or $2.06 a share, compared with $29.9 million, or
$2.18 a share, a year earlier.
Net revenue, which excludes excise taxes, rose 3% to $244.8
million.
Analysts surveyed by Thomson Reuters had projected profit of
$1.94 a share on $238.9 million in revenue.
Gross margin narrowed to 51.8% from 54% a year earlier.
Founded in 1984 by C. James Koch, the company revolutionized the
beer industry in the U.S. when it started selling a "craft" beer
from the Koch family recipe book. It was a beer that Mr. Koch's
great-grandfather had made at his brewery in St. Louis in the
1870s.
Mr. Koch, the company's chairman and former chief executive,
went bar to bar selling the concoction, named after Samuel Adams,
the Revolutionary War leader and onetime brewer. The first cases of
Samuel Adams Boston Lager were sold on Patriots' Day in Boston in
1985. Last year, the company sold about 4.3 million barrels, up
nearly 4% from the year earlier.
The Brewers Association, which represents small brewers, defines
craft breweries as those who make up to 6 million barrels a
year.
One of the largest brewers still based in the U.S., Boston Beer
has been hard hit by shifting consumer preferences and a surge in
competition as craft beers became trendy. In response, it has
introduced new styles and is planning to revamp its Sam Adams brand
with new packaging this year.
Jonathan N. Potter, an LVMH Moë t Hennessy Louis Vuitton and
Diageo PLC executive, is scheduled to join the company next month
as chief marketing officer.
Write to Maria Armental at maria.armental@wsj.com
(END) Dow Jones Newswires
July 21, 2016 18:15 ET (22:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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