Friday 14 June 2024
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Starbucks reports record 3Q revenue of $9.2B, but misses expectations despite strong rebound in China’s sales

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MILAN – Starbucks reported on Tuesday a mixed fiscal third quarter, as earnings beat expectations, but same-store sales slightly missed expectations, despite a big rebound in China. Same-store sales in China jump 46%, reversing last year’s declines due to Covid infections.

The world’s biggest coffee chain reported 3Q net income of $1.14 billion, or 99 cents a share, compared with $912.9 million, or 79 cents a share, in the same quarter last year. Adjusted for restructuring and impairment costs, Starbucks earned $1 a share.

Revenue increased 12% to a record $9.2 billion, but that was lower than Bloomberg consensus estimates of $9.3 billion. Same-store sales, a key gauge of how existing stores are performing, came in short of analysts’ expectations too, up 10%, compared to estimates of an 11.12% increase.

International same-store sales grew 24% in the quarter, in line with estimates, powered by higher traffic. That included higher-than-anticipated growth in China, which is still recovering after extended Covid-19 restrictions.

“I am encouraged by our performance in the quarter,” Starbucks CEO Laxman Narasimhan said during an analyst call discussing the financial results Tuesday, noting that in the quarter revenue in China grew 51% year-over-year.

Starbucks: Q3 Fiscal 2023 Highlights

  • Global comparable store sales increased 10%, primarily driven by a 5% increase in comparable transactions and a 4% increase in average ticket
    • North America and U.S. comparable store sales increased 7%, driven by a 6% increase in average ticket and a 1% increase in comparable transactions
    • International comparable store sales increased 24%, driven by a 21% increase in comparable transactions and a 2% increase in average ticket; China comparable store sales increased 46%, driven by a 48% increase in comparable transactions and a 1% decline in average ticket
  • The company opened 588 net new stores in Q3, crossing the 37,000 store count threshold globally, ending the period with 37,222 stores: 51% company-operated and 49% licensed
    • At the end of Q3, stores in the U.S. and China comprised 61% of the company’s global portfolio, with 16,144 and 6,480 stores in the U.S. and China, respectively
  • Consolidated net revenues of $9.2 billion, up 12% from the prior year, or 14%, inclusive of more than 1% unfavorable impact from foreign currency translation
  • GAAP operating margin of 17.3% increased from 15.9% in the prior year, primarily driven by sales leverage, pricing and productivity improvement. This expansion was partially offset by previously committed investments in labor, including enhanced store partner wages and benefits and higher general and administrative costs related to our Reinvention Plan.
  • Non-GAAP operating margin of 17.4% increased from 16.9% in the prior year
  • GAAP earnings per share of $0.99 grew 25% over prior year
    • Non-GAAP earnings per share of $1.00 grew 19% over prior year
  • Starbucks Rewards loyalty program 90-day active members in the U.S. increased to 31.4 million, up 15% year-over-year

“Our strong third quarter results point to all-around momentum in the business, and reflect the significant progress we are making against our Reinvention Plan. Our results were also amplified by the distinctive competitive advantages that set us apart in the market,” commented Narasimhan.


“Starbucks is an iconic, durable brand and I am confident in the multiple paths available for the company to drive significant growth and margin improvement, which position us well to create outsized long-term shareholder value,” he added.

“I am pleased with our third quarter performance, which beat our expectations, including our International segment. Our performance was bolstered by the progress we are making against our strategies, specifically our Reinvention Plan, and its unfolding into tangible financial results, as we delivered earnings growth of 19% well above our revenue growth of 12%,” commented Rachel Ruggeri, chief financial officer.

“The momentum we have built and strength we are seeing globally, gives us the confidence and optimism to close our fiscal year strong,” Ruggeri added.


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