Starbucks (SBUX) released mixed first-quarter fiscal results on Tuesday, with the coffee giant posting better-than-expected first-tier gains, even as the COVID-19 crisis undermined part of its 2020 momentum.
Here’s what the Seattle-based company reported, compared to Wall Street expectations, according to a Bloomberg consensus estimate:
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Recipe: US $ 6.7 billion against expected US $ 6.92 billion
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Adj. earnings per share (EPS): 61 cents versus 55 cents per share expected
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Same store sales in the USA: -5.0% against -4.16% expected
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International sales in the same store: -3% versus -1.70% expected
In the earnings release, CEO Kevin Johnson said that Starbucks continues to show “significant and sequential improvements” in its earnings results, despite the interruption of the coronavirus pandemic in its business.
“Investments in our partners, beverage innovation and digital customer relationships have continued to fuel our recovery and position Starbucks for long-term sustainable growth,” said Johnson.
“We remain optimistic about our robust operating outlook for fiscal year 2021, as well as our ability to unlock the full potential of Starbucks to create value for our shareholders,” added the CEO.
For the first fiscal quarter, consolidated net revenue fell 5% over the previous year to $ 6.7 billion, highlighting how the return to roadblocks and a difficult job market is affecting consumer spending. The company pointed out the impact of COVID-19 “on reducing customer traffic, modified operations, reducing store hours and temporarily closing stores”.
During the quarter, global sales of comparable stores followed closely fell by 5%, while comparable transactions fell by 19%, but the average ticket size increased by 17%.
In the United States, same-store sales fell 5%, while comparable transactions fell 21%, but the average ticket size increased 19%. In China – where the pandemic originated first, but was also the first to recover – sales from comparable stores increased by 5%, driven by a 9% increase in average ticket size.
Starbucks also released updated fiscal guidelines for the second quarter. The company expects comparable store sales in the U.S. to be between 5 and 10%, while same-store sales in China are expected to grow 100%. The company also sees adjusted earnings per share in the range of 45 to 50 cents.
Starbucks also announced that COO and group president Roz Brewer has accepted the position of CEO at another publicly traded company and will leave Starbucks in late February. Brewer’s new position will be announced in the near future, the company added. Earlier this month, Starbucks said its CFO Patrick Grismer will retire on February 1, naming Rachel Ruggeri as his successor.
Elsewhere in the launch, 90-day Starbucks Rewards active members increased 15% over the previous year, to 21.8 million users in the United States
Starbucks opened 278 new net stores, ending the quarter with 32,938 stores worldwide. The company noted that 61% of its global store footprint is located in the US and China, with 15,340 and 4,863 stores, respectively.
Although many of its main customers work from home, as the coronavirus pandemic restricts public life, Starbucks, however, has made an impressive recovery.
Analysts cite the company’s resilience in major international markets such as China, and its effort to adapt its extensive chain of comfortable stores to the realities of social detachment – in part by increasing digital and promoting loyalty rewards.
In a research note last week, Morningstar noted that Starbucks was “well positioned for success” because of these factors. “We remain confident that it will meet its annual EPS growth of 10% [target]”, Wrote the company.
Peter Saleh, an analyst at BTIG, said last month that “although we expect Starbucks to make a full recovery as soon as the vaccine is widely available, we don’t see a same-store sales catalyst in the coming months.”
However, “we believe investors are looking beyond this recent weakening to accelerate growth in the second half of fiscal 2021,” said Saleh – adding that same-store sales in China are expected to increase by 4% to 5% in the first fiscal quarter.
In a note to customers last week, analyst Christopher Carril of RBC Capital Markets suggested that there may be some noise in Starbucks’ results, given the challenge of the same quarter last year, when the virus first appeared. Still, the bank has an “Outperform” rating on Starbucks shares.
Like many other retail and food / beverage outlets, Starbucks suffered from a lack of pedestrian traffic during COVID-19. However, according to the data intelligence platform Placer.ai, visits to the coffee giant have started to tend “clearly in the right direction”, even with fewer users entering its stores.
Starbucks shares, which broke new records in December, fell more than 1% in post-market trading after closing at $ 104.69.
Brooke DiPalma is a producer and reporter at Yahoo Finance. Follow her on Twitter at @BrookeDiPalma.
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