Starbucks surpassed analysts’ projections in its latest quarterly report, attributing the success to robust demand for higher-priced beverages in the United States. The company’s premarket trading saw a significant 10% surge in its shares.
In the fiscal fourth quarter, Starbucks reported an earnings per share of $1.06, outperforming the anticipated 97 cents. Meanwhile, its revenue stood at $9.37 billion, exceeding the projected $9.29 billion, as per a survey conducted by LSEG (formerly known as Refinitiv).
The coffee giant’s net income attributable to the company for the quarter ending on October 1 was $1.22 billion, translating to $1.06 per share, a substantial increase from the previous year’s $878.3 million, or 76 cents per share.
Notably, the company witnessed an 11.4% climb in net sales, reaching $9.37 billion.
The boost in Starbucks’ performance was underscored by an 8% rise in same-store sales, driven by an increase in the average purchase amount and a 3% uptick in customer footfall at its cafes. Although analysts surveyed by StreetAccount had anticipated a 6.8% growth in same-store sales, Starbucks’ domestic locations outpaced expectations.
The introduction of its autumn menu, which featured the popular pumpkin cream cold brew and the iconic pumpkin spice latte, in late August was instrumental in attracting a record-breaking average weekly sales, as CEO Laxman Narasimhan informed analysts during the conference call.
In the U.S. and North America, same-store sales experienced an 8% upsurge. Starbucks’ domestic market witnessed a 6% increase in average purchases, complemented by a 2% rise in foot traffic.
Outside of North America, same-store sales grew by 5%, solely driven by an influx of customer visits. In China, Starbucks’ second-largest market, same-store sales climbed by 5%, with an 8% increase in customer visits but a 3% decline in the average ticket size.
Narasimhan expressed optimism about the progress in China, despite the challenges faced over the past few years. The market’s slow recovery and investor concerns had previously affected the company’s stock performance.
Looking ahead to fiscal 2024, Starbucks adjusted its same-store sales growth forecast to a range of 5% to 7%, down from the previously projected 7% to 9%.
During the conference call, CFO Rachel Ruggeri emphasized that the outlook for same-store sales reflects a “healthy, as well as achievable, comp guidance.” However, other aspects of the company’s future performance remained within its long-term targets. The revenue forecast of 10% to 12% aligns with prior guidance, although Ruggeri hinted that net sales might fall toward the lower end of the range.
Starbucks maintained its earnings per share growth projection of 15% to 20%.
The company plans to expand its global presence by 7% in fiscal 2024, with a 4% growth expected in the U.S. market and a significant 13% expansion anticipated in China.
For the last three quarters of the fiscal year, Starbucks projects that China will witness same-store sales growth ranging from 4% to 6%.
Notably, the company’s outlook doesn’t incorporate any potential impact from currency exchange rates.
Moreover, Starbucks is set to present an update on its “reinvention” strategy to investors in New York City on Thursday afternoon.
