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By Dhirendra Tripathi
Investing.com – Boston Beer stock (NYSE:SAM) fell more than 3% Friday as the volumes it had built up in anticipation of strong sales of its hard seltzer brand Truly weighed on costs in wake of poor sales in the third quarter.
The company closed the quarter in the red compared to a profit a year ago.
Sales of hard seltzers were strong in the pandemic and the company stocked up to meet demand that it expected to only rise. A rude shock awaited the company as on-premise demand for hard seltzers was much slower than at-home consumption. That outcome left it with huge inventory the company is now forced to account for.
"While Truly has continued to grow, gain share and solidify its long-term position, the slower category performance has reduced our full-year growth expectations for Truly to be between 20-25% year-over-year,” President and CEO Dave Burwick said in a note.
But the company is not giving up yet. Burwick said the category will remain a very important segment of the drinks market in the future.
Gross margin of around 31% decreased from the nearly 49% realized in the third quarter of 2020, primarily due to $84.9 million direct and indirect volume adjustment costs, a result of the hard seltzer slowdown and higher materials costs.
Third-quarter net revenue fell 14% to $561.6 million.
Third quarter net loss of $58.4 million or $4.76 per diluted share represented a decrease of $139.2 million or $11.27 per diluted share compared to net income in the third quarter of last year.
Net loss was $58.42 million compared to a profit of $80.76 million in the same quarter last year.