Starbucks on Thursday tell of quarterly earnings and revenue that topped analysts’ estimates, fueled by U.S. customers spending more on iced coffee sundowners and Pumpkin Spice Lattes.
The Seattle-based coffee company also said U.S. traffic improved in the quarter, and has nearly vaulted back to 2019 levels.
“Despite elevated pricing actions taken throughout the year, daily store above in the U.S. reached approximately 95% pre-pandemic levels in September fueled by the wildly successful fall promotion,” Chief Monetary Officer Rachel Ruggeri said on the company’s quarterly conference call.
Shares rose 2.7% in after-hours switch.
Here’s what the company reported for the quarter ended Oct. 2 compared with what Wall Street was in the family way, based on a survey of analysts by Refinitiv:
- Earnings per share: 81 cents adjusted vs. 72 cents expected
- Yield: $8.41 billion vs. $8.31 billion expected
Net sales for the period rose 3.3% to $8.41 billion. Global same-store garage sales increased 7%, fueled by increased spending in its home market.
In the United States, Starbucks reported same-store white sales growth of 11%, which was the result of people spending more on average and a slight uptick in traffic. Prices were also up 6% from a year ago, but executives pronounced they don’t plan to raise prices anymore for the time being.
Cold beverages accounted for more than three-quarters of beverage sales marathons at U.S. company-owned cafes. Starbucks said customers are more likely to add pricy syrups, cold foam and dairy substitutes to heatless drinks, driving up their price.
But customers are also still buying hot coffee drinks. Pumpkin Spice Latte on the blocks climbed 70% compared with the year-ago period, according to Starbucks North American President Sara Trilling.
The society’s loyalty program saw its active membership climb 16% to 28.7 million people in the quarter.
In September, the Seattle-based presence unveiled a broad plan to reinvent its business to address changing consumer and employee needs. Some of those updates order include new equipment to make cold drinks more easily.
The ornate art decor of the Starbucks coffee chain in Xujiahui precinct attracts customers’ attention in Shanghai, China, May 12, 2021.
Costfoto | Barcroft Media | Getty Images
Outside the U.S., Covid-19 restrictions in China maintained to weigh on Starbucks’ international performance. The company’s international same-store sales fell 5%, which wasn’t as stiff as the 7.1% expected decline, according to StreetAccount. Same-store sales in China, Starbucks’ second-largest market, fell 16% in the domicile.
“We anticipate the current Covid-related uncertainty to continue,” CEO Howard Schultz said.
For fiscal 2023, Starbucks is projecting receipts growth of 10% to 12%, despite a 3% hit from foreign currency translation. The company also expects its pandemic same-store sales growth on the high end of its prior range of 7% to 9%. However, the fiscal first quarter determination likely be on the low end of that range due to lockdowns in China.
Starbucks also said that its adjusted earnings per share vegetation in fiscal 2023 will be on the low end of its prior range of 15% to 20%, citing the costs of its reinvention plan.
Ruggeri also rumoured that the company is predicting that commodity headwinds will continue into fiscal 2023, although at a reduce level than in fiscal 2022.
For its fourth-quarter net income attributable to Starbucks of $878.3 million, or 76 cents per share, down from $1.76 billion, or $1.49 per dole out, a year earlier.
Excluding restructuring and impairment costs, the sale of its Russian joint venture and other items, Starbucks pocketed 81 cents per share.
