Starbucks logo is seen on a cup on this illustration photo taken within the cafe on the airport in Charleroi, Belgium on July 27, 2023.
Jakub Porzyck | Nurphoto | Getty Images
Starbucks on Tuesday reported quarterly earnings that beat analysts’ expectations, but its same-store sales missed Wall Street’s estimates.
Still, the corporate reaffirmed its fiscal 2023 outlook during its conference call. Starbucks is projecting revenue growth of 10% to 12%. The corporate barely raised its adjusted earnings-per-share growth outlook to 16% to 17% from the low end of 15% to twenty%.
Shares of the corporate fell lower than 1% in prolonged trading.
Here’s what the corporate reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:
- Earnings per share: $1 adjusted vs. 95 cents expected
- Revenue: $9.17 billion vs. $9.29 billion expected
The coffee giant reported fiscal third-quarter net income attributable to Starbucks of $1.41 billion, or 99 cents per share, up from $912.9 million, or 79 cents per share, a 12 months earlier.
The corporate’s operating margin expanded to 17.3% from 15.9%, driven by improvements in productivity and better menu prices.
Excluding items, Starbucks earned $1 per share.
Net sales rose 12% to $9.17 billion.
The corporate’s same-store sales grew 10%, falling wanting StreetAccount estimates of 11%. Same-store sales growth in each North America and its international markets was softer than expected.
The coffee giant’s North American same-store sales grew 7%, missing estimates of 8.4%.
Still, demand stays strong in the corporate’s domestic market. Starbucks said customer traffic grew 1% within the quarter. What’s more, customers were buying more breakfast sandwiches together with their coffee orders and adding pricey extras like cold foam to beverages.
“We actually see growth in our largest sizes over our smaller sizes, so we’re not seeing down trading in our customer base,” CEO Laxman Narasimhan told analysts on the corporate’s conference call.
Cold drinks accounted for 3 quarters of U.S. beverage orders as consumer preferences proceed to shift away from hot coffee.
Outside North America, Starbucks’ same-store sales increased 24%, falling wanting estimates of 24.2%.
Improved demand in China, the corporate’s second largest market, fueled the corporate’s international growth. China’s same-store sales skyrocketed 46% within the quarter.
