Starbucks on Thursday reported quarterly earnings and revenue that topped analysts’ expectations, fueled by strong U.S. demand for pricier drinks.
Shares of the company closed up 9.5% on Thursday.
Here’s what Starbucks reported for its fiscal fourth quarter compared with what Wall Street was expecting, based on a survey of analysts by LSEG, formerly known as Refinitiv:
- Earnings per share: $1.06 vs. 97 cents expected
- Revenue: $9.37 billion vs. $9.29 billion expected
The coffee giant reported net income attributable to the company for the quarter ended Oct. 1 of $1.22 billion, or $1.06 per share, up from $878.3 million, or 76 cents per share, a year earlier.
Net sales climbed 11.4% to $9.37 billion.
The company’s same-store sales rose 8%, fueled by higher average checks and a 3% increase in customer traffic to its cafes. Analysts surveyed by StreetAccount were expecting same-store sales growth of 6.8%, but the company’s domestic locations outperformed.
Starbucks launched its fall menu, including the pumpkin cream cold brew and iconic pumpkin spice latte, in late August. With a legion of dedicated fans, those drinks typically drive customers to its locations while they are available.
“We had a remarkable fall launch that led to record-breaking average weekly sales,” CEO Laxman Narasimhan told analysts on the company’s conference call.
U.S. and North American same-store sales grew 8%. The average check in Starbucks’ home market rose 6%, while traffic ticked up 2%.
Outside North America, same-store sales increased 5%, driven entirely by more customer visits.
And in China, Starbucks’ second-largest market, same-store sales rose 5%. Customer traffic increased 8%, but the average ticket fell 3%.
“We feel good about the overall returns that we’re getting there, and I’m heartened by how the business is coming together, despite all the headwinds that have been there for the last couple of years,” Narasimhan told analysts.
A year ago, same-store sales in China plunged 16%, hurt by the Chinese government’s long-held zero Covid policy, which hamstrung traffic. China rolled back that policy several months later, but Starbucks’ cafes there faced an uneven recovery. Investor fears about the market have weighed on the stock in recent months.
Looking to fiscal 2024, Starbucks expects same-store sales growth of 5% to 7%, down from its long-term forecast of 7% to 9% same-store sales growth.
CFO Rachel Ruggeri said on the call that the outlook for same-store sales reflects a “healthy, as well as achievable, comp guidance.”
But the rest of the company’s outlook fell within its previously stated long-term targets. For example, the company’s revenue forecast of 10% to 12% matches its prior guidance, although Ruggeri said net sales will likely come in on the lower end of that range.
Starbucks also maintained its earnings per share growth forecast of 15% to 20%.
The company is forecasting that it will increase its global footprint by 7% in fiscal 2024. Its U.S. footprint is expected to grow 4%, while China’s will climb 13%.
Starbucks projects that China will report same-store sales growth of 4% to 6% during the last three quarters of the fiscal year.
The company’s outlook doesn’t include any impact from currency exchange rates.
Starbucks will also be giving an update on its “reinvention” strategy to investors on Thursday afternoon in New York City.
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