Robert Mondavi Corp., one of the largest U.S. wine producers, said Monday that its fiscal fourth-quarter and full-year earnings will be 15 cents a share below estimates because of slower-than-expected sales and higher expenses for its top-selling Woodbridge Chardonnay.
The announcement was made after the market closed. Mondavi shares fell $2.31 to close at $32.06 before trading on Nasdaq was halted. Mondavi's is the worst-performing beverage stock so far this year.
The Oakville-based company has been hurt in the past by a shortage of Woodbridge Chardonnay. The shortage was the result of bad weather that diminished the grape crops in 1995 and '96. The 1997 crop became available earlier this year.
"You can't expect [wineries] to grind out quarterly earnings that are consistent," said Jon Fredrikson, a partner with Gomberg, Fredrikson & Associates, a wine industry consulting and economic research firm in San Francisco. "The wine business is agriculturally based."
Fredrikson noted that the industry is in a transition phase from a strong seller's market, when wineries were "in the driver's seat," to a period of aggressive pricing.
Wine lovers stand to benefit even more from price-cutting as recently planted vineyards begin to produce grapes. The industry faces the prospect of an oversupply of grapes within the next year or two.
Other wine stocks also fell during Monday. Analysts said Mondavi's announcement over the weekend that it would have a conference call Monday to discuss sales spooked investors. Beringer Wine Estates' shares fell $2.38 to close at $42.75 on Nasdaq.
Mondavi is now expected to earn about 39 cents a share in its fourth quarter, which ends June 30. The company is expected to report results next month.
For the same period last year, Mondavi reported net income of $7.4 million, or 47 cents a share. It had been expected to earn 54 cents a share in the current fourth quarter, according to a survey of analysts.