The coffee giant reported net income attributable to the firm for the quarter ended October 1 of $1.22 billion, or $1.06 per share, up from $878.3 million, or 76 cents per share, a year back
Starbucks stock rises 10 per cent as U.S. customers buy into pricier drinks
Starbucks on Thursday reported quarterly earnings and revenue that topped analysts’ expectations, fuelled by strong U.S. demand for pricier drinks.
Shares of the firm ended 9.5 per cent higher on Thursday.
The coffee giant reported net income attributable to the firm for the quarter ended October 1 of $1.22 billion, or $1.06 per share, up from $878.3 million, or 76 cents per share, a year back.
Net sales jumped 11.4 per cent to $9.37 billion.
The firm’s same-store sales increased 8 per cent, fuelled by higher average checks and a 3 per cent rise in customer traffic to its cafes. Analysts surveyed by StreetAccount were expecting same-store sales growth of 6.8 per cent, but the firm’s domestic locations outperformed.
We had a remarkable fall launch that led to record-breaking average weekly sales, Chief Executive Officer Laxman Narasimhan told analysts on the firm’s conference call.
U.S. and North American same-store sales increased 8 per cent. The average check in Starbucks’ home market increased 6 per cent, while traffic rose 2 per cent.
Outside North America, same-store sales rose 5 per cent, driven entirely by more customer visits.
And in China, Starbucks’ second-biggest market, same-store sales increased 5 per cent. Customer traffic rose 8 per cent, but the average ticket declined 3 per cent.
We feel good about the overall returns that we are getting there, and I am heartened by how the business is coming together, in spite of all the headwinds that have been there for the last couple of years, Narasimhan told analysts.
A year back, same-store sales in China slumped 16 per cent, 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 concerns about the market have weighed on the stock in recent months.
Looking to fiscal 2024, Starbucks expects same-store sales growth of 5 per cent to 7 per cent, down from its long-term forecast of 7 per cent to 9 per cent same-store sales growth.
Chief Financial Officer 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 firm’s outlook dropped within its previously stated long-term targets. For instance, the firm’s revenue forecast of 10 per cent to 12 per cent matches its earlier 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 per cent to 20 per cent.