The choice of phrase comes as chief executive Bill Newlands notes that he was “not pleased” with the Smiths Falls, Ont.-based pot producer’s recent year-end results.
Constellation Brands reported a US$828 million decrease in the fair value of its investment in Canopy Growth in the in its fiscal first quarter. But, the alcohol giant known for Corona beer and Kim Crawford wine remains cautiously upbeat about its 38 per cent stake in the company.
“While we remain happy with our investment in the cannabis space and its long-term potential. We were not pleased with Canopy's recent reported year-end results,” Newlands said on a call with analysts on Friday. “We need to all recognize there are going to be fits and starts around a business like this.”
Constellation Brands’ executive vice president and chief financial officer David Klein echoed Newlands, adding that the company knew Canopy Growth’s Canadian cannabis business was “volatile.”
Last week, the world’s largest cannabis company by market capitalization reported a net loss of $670 million for full-year fiscal 2019, more than 12 times the $54 million booked in the same period a year ago.
Newlands cited the slow rollout of brick-and-mortar cannabis stores in the key market of Ontario among the challenges facing Canopy Growth and its peers.
“We continue to aggressively support Canopy on a more focused, long-term strategy to win markets and form factors that matter while paving a clear path to profitability," Newlands said. “What we remain excited about is that this is going to be big long-term business.”
He added that he continues to expect Canopy Growth to achieve the previously stated $1 billion revenue goal.
“We are working with Canopy almost on a daily basis to ensure that we are all focused on the right things,” Newlands said.
Constellation Brands reported earnings per share of US$2.21, up from US$2.20 a year ago. Analysts had expected $2.04. Excluding Canopy Growth equity losses, the New York-based company says it earned US$2.40 per share during the quarter.