By Dhirendra Tripathi
Investing.com – Boston Beer stock (NYSE:SAM) plunged 7% Thursday as continuing weakness in sales of seltzers forced it to withdraw its annual guidance.
To make matters worse, Kehoe is threatening a class action lawsuit. The law firm said it is investigating the company to determine if it engaged in securities fraud or other unlawful business practices.
In a note to the Securities and Exchange Commission, Boston Beer said the market for hard seltzer products has continued to decelerate. The company now expects to incur hard seltzer-related inventory write-offs, shortfall fees payable to third-party brewers, and other costs that will be expensed during the remainder of the financial year.
As a result, Boston Beer currently expects annual earnings per share to fall below the previously-reported estimate of $18 to $22.
The company trimmed its forecast in July after seltzer sales dealt it a rude surprise. At that time, founder and Chairman Jim Koch said the market has matured and the consumption of the beverage has moved to on-premise channels. New entrants have proliferated, leading to more choices for the consumer, he said.
“Our outlook for the hard seltzer category in the second half of 2021 is uncertain and we have planned our capacity and spending based upon several volume scenarios,” he said then.
This came even as the company incurred much higher advertising and selling expenses due to investments in brands and more media spending.