Monster Beverage Shares Plunge After Disappointing Q2 Earnings
Monster Beverage shares fell sharply, tumbling 9% in after-hours trading following a disappointing Q2 earnings report. The energy drink maker posted adjusted earnings per share (EPS) of $0.41, missing the consensus estimate of $0.45.
Revenue for the quarter came in at $1.90 billion, which was below analysts' projections of $2.02 billion, but still up 2.5% year-over-year (YoY). Net sales for Monster's core energy drinks segment increased by 3.3% to $1.74 billion. However, the company faced significant headwinds from unfavorable foreign exchange rates, which had a $67.7 million negative impact on overall net sales.
Hilton H. Schlosberg, Vice Chairman and Co-Chief Executive Officer, commented, "The energy drink category in the United States and certain other countries experienced lower growth rates in the second quarter. Retailers have reported a reduction in convenience store foot traffic and we have seen a shift at retail towards more mass and dollar channels."
Despite these challenges, gross profit margins saw an improvement, rising to 53.6% compared to 52.5% in the same quarter last year. This improvement was driven by decreased freight costs and pricing actions in certain markets.
To counter the recent challenges, the company plans to implement a 5% price increase on its core brands and packages in the United States, effective November 1.
Monster Beverage's international sales grew 4.3% to $746.0 million, representing 39% of total net sales. On a foreign currency adjusted basis, international sales increased by 13.7%.
