Illustration photo of the Starbucks logo on a cup at the airport in Charleroi, Belgium on July 27, 2023.
Photo by Jakub Porzyck/Nurphoto/Getty Images
Starbucks
reported better-than-expected quarterly earnings on Tuesday, although its same-store sales fell short of Wall Street’s estimates.
However, the company maintained its fiscal 2023 outlook during the conference call. Starbucks is projecting revenue growth of 10% to 12%. The company also slightly raised its adjusted earnings-per-share growth outlook to 16% to 17% from the previously stated range of 15% to 20%.
In after-hour trading, the company’s shares declined by less than 1%.
Here’s a breakdown of Starbucks’ reported numbers compared to analysts’ expectations:
- Earnings per share: $1 (adjusted) vs. 95 cents expected
- Revenue: $9.17 billion vs. $9.29 billion expected
In the fiscal third quarter, Starbucks recorded a net income attributable to the company of $1.41 billion, or 99 cents per share, compared to $912.9 million, or 79 cents per share, in the previous year.
The company’s operating margin expanded to 17.3% from 15.9%, driven by increased productivity and higher menu prices.
On an adjusted basis, Starbucks earned $1 per share.
Net sales rose by 12% to $9.17 billion.
Same-store sales growth, both in North America and internationally, fell short of expectations, with an overall growth rate of 10% compared to StreetAccount’s estimate of 11%. In North America, same-store sales grew by 7%, missing estimates of 8.4%.
Despite this, Starbucks noted strong demand in its domestic market, with a 1% increase in customer traffic. Additionally, customers were purchasing more breakfast sandwiches and opting for premium additions like cold foam in their beverages.
“We have observed growth in our larger-sized offerings over the smaller ones, indicating that our customer base is not downgrading,” said CEO Laxman Narasimhan during the conference call.
Cold drinks accounted for three-quarters of U.S. beverage orders as consumer preferences shift away from hot coffee.
Outside of North America, Starbucks experienced a 24% increase in same-store sales, slightly below estimates of 24.2%. Improved demand in China, the company’s second-largest market, drove international growth, with same-store sales in China surging by 46% during the quarter.
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