Share of Boston Beer Co Inc. (NYSE: SAM) slumped 8.75% to $158.15 on Friday after the company announced on Thursday that its earnings were nearly cut in half in the first three months of the year as the maker of Samuel Adams Boston Lager faces increased competition from brewers of craft beers.
During this quarter, Boston Beer released Samuel Adams Nitro White Ale, Samuel Adams Nitro IPA, Samuel Adams Nitro Coffee Stout and Samuel Adams Rebel Grapefruit IPA. However, these new beers were not enough to fend off competition from competitors and Boston Beer said it expects its shipments to down between 2% and 4% in 2016.
Martin Roper, the Company's President and CEO stated, "In the first quarter, our depletions volume was significantly below our expectations, as the declines in our existing styles of our Samuel Adams and Angry Orchard brands were not offset by our new styles or the growth of the rest of our brand portfolio. The lower volume combined with the higher planned spending and excess brewery capacity significantly impacted our financial results for the quarter. We are focused on adjusting our cost structure, based on our lower volume expectations, and on driving efficiencies throughout the organization, so that we direct funds to the highest growth initiatives.”
According to the first quarter announcement, revenue decreased approximately 5.1% to $202 million compared with $212.834 million in the same quarter last year. Net income down almost 49% from $13.743 million last year to $7 million this quarter. Diluted earnings per share was $0.53 which down 47% from $1 last year.
Boston Beer said it would focus increasingly on finding ways to cut costs and become more efficient after several years of rapid growth and capital investments. Martin Roper told analysts Boston Beer had recently hired more employees in anticipation of growth that hasn’t materialized. That also has weighed on operating margins, but the company hopes to adjust staffing levels through normal attrition.