UPDATE: Constellation Brands 1Q Profit Down 85% On Restructuring

Constellation Brands Inc.'s (STZ) fiscal first-quarter earnings plunged 85% on restructuring costs, as wine sales dropped again and consumers continued to trade down.

Still, shares jumped $1.17, or 9.2%, to $13.85 in recent trading as first-quarter earnings, excluding charges, at the biggest global wine marketer and distributor by volume topped Wall Street's view by 1 cent, and the slump in wine sales - which make up the bulk of its earnings, weren't as bad as some feared.

However, gross margin fell to 33.9% from 35.3%, due in part to consumers gravitating toward lower-priced wine and beer products.

Even though Constellation has been considered recession-resistant, it hasn't necessarily been recession proof. Constellation has cut jobs and said last month it would revamp its international operations amid weakness at its U.K. and Australian businesses. But branded-wine sales in these countries rose 6% and 7%, respectively, in the latest quarter excluding currency changes along with acquisitions and divestitures.

Overall, branded wine sales fell 10%, but were flat minus currency changes. JPMorgan analyst John Faucher said in a note he expected branded wine sales to fall 15%.

President and Chief Executive Rob Sands said the economic environment remains challenging, but the company continues to focus on generating cash, reducing debt and boosting its bottom line. Debt levels fell $110 million during the quarter to $3.71 billion.

"We've been impacted by the global slowdown," Sands said during an earnings conference call Wednesday. But "we're executing and taking the appropriate action designed the further position our business for success."

For the period that ended May 31, Constellation posted income of $6.5 million, or 3 cents a share, down from income of $44.6 million, or 20 cents a share, a year earlier. Excluding restructuring and inventory charges, earnings dipped to 33 cents a share from 34 cents.

Revenue decreased 15% to $791.6 million, in part on divestitures. Excluding acquisitions and divestitures, sales minus currency changes rose 1%.

Analysts polled by Thomson Reuters expected earnings of 32 cents on revenue of $781 million.

Spirit sales slumped 43% on the divestiture of Constellation's "value" business. Organic sales rose 13% amid a 33% surge at the Svedka vodka brand.

Constellation, whose products include Mondavi wines and as well as Corona beers, has been shifting its focus to higher-priced products, where most of the growth has been in the alcoholic beverages industry in recent years.

-By Kelly Nolan, Dow Jones Newswires; 212-416-2167; [e-mail]

(Kerry Grace Benn contributed to this report).