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Boston Beer stock falls 6% as company lowers its forecast

Stocks in Boston Beer tumbled after its third quarter results showed the company had missed its profit target and was lowering its forecast for the rest of the year. 

Boston’s financial results for its third quarter ending 30 September 2023 show that the company shipped 2.5% less product than this time last year, shifting around 2.3 million barrels.

There were decreased sales in the company’s Truly, Angry Orchard, Samuel Adams and Dogfish Head brands, partially offset by increases in its Twisted Tea and Hard Mountain Dew brands.

The results also show that general and administrative expenses for Boston Beer increased by US$4.9 million or 13.2% from the third quarter of 2022 (or US$15.0 million or 12.9% from year-to-date 2022) due to higher salaries and “increased consulting costs”.

Chairman and founder Jim Koch was keen to put a positive spin on the news, though admitted Boston would lower its forecast for the rest of the year.

“Our depletions trends improved from a decrease of 7% in the second quarter to a decrease of 3% in the third quarter,” said Koch.

“We continue to execute our operational plans and grew revenue, gross margin and operating cash flow in the quarter which enabled us to repurchase over US$69 million in shares year-to-date.”

Despite sales continuing to slide, Koch insisted that: “Our highly cash-generative business and strong balance sheet allow us to invest in our brands as we work to return to long-term sustainable growth.”

He also stressed that the company had ended its third quarter “with no debt”, and added that Boston Beer planned to focus on its hard iced tea product Twisted Tea, for which “momentum has remained strong”, and its Truly hard seltzer.

President and CEO Dave Burwick confirmed that that the company was lowering its forecast for the rest of 2023.

“Based on our results year-to-date and our expectations for the fourth quarter, we are narrowing our revenue and EPS guidance ranges,” said president and CEO Dave Burwick.

“We plan to continue to invest behind the Twisted Tea and Truly brands while also nurturing innovation across Beyond Beer categories to drive long-term growth.”

Earlier this year there was speculation about a potential Heineken takeover of Boston Beer, with a Wall Street analyst claiming that such a move holds “strategic rationale for both parties.”

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