Starbucks Reports Quarterly Earnings Beat, but Misses Same-Store Sales Estimates

Starbucks announced its quarterly earnings on Tuesday, surpassing analysts’ expectations for earnings per share. The company reported adjusted earnings per share of $1, compared to the expected 95 cents. However, despite this positive news, the coffee giant’s same-store sales fell short of Wall Street’s estimates.

Starbucks recorded a net income attributable to the company of $1.41 billion, or 99 cents per share, for the fiscal third quarter. This was a significant increase from the previous year’s $912.9 million, or 79 cents per share. The company’s operating margin also saw improvement, expanding to 17.3% from 15.9%, driven by enhancements in pricing and productivity.

Excluding certain items, Starbucks reported earnings of $1 per share. Net sales for the quarter reached $9.17 billion, experiencing a 12% increase. However, same-store sales, an essential metric for measuring performance, disappointed investors with a growth of only 10%, falling short of StreetAccount estimates of 11%.

Both North American and international markets experienced softer same-store sales growth than anticipated. In North America, same-store sales grew by 7%, missing estimates of 8.4%. Starbucks attributed this to a 1% increase in customer traffic during this quarter. On the international front, same-store sales improved by 24%, but still fell short of estimates, which were at 24.2%. The growth in international markets was primarily fueled by increased demand in China, with same-store sales experiencing a remarkable surge of 46%.

Future Outlook

Starbucks has yet to provide its fiscal 2023 outlook, but it plans to address it in the upcoming conference call. Previously, the company projected revenue growth between 10% and 12%, with adjusted earnings-per-share growth expected to be on the lower end of 15% to 20%.

Starbucks’ quarterly earnings report showcased stronger-than-expected earnings per share, indicating its ability to manage costs effectively. However, the disappointing same-store sales figures, especially in North America, raise concerns about the company’s growth prospects. The surge in international same-store sales, driven by strong demand in China, provides some optimism for Starbucks’ global expansion efforts. Investors will eagerly await the company’s fiscal 2023 outlook to gain insights into its future growth strategies and potential challenges.