Starbucks Brews Success in Q3 Earnings Despite Some Missed Sips

Starbucks, the globally celebrated coffeehouse chain, recently unveiled its Q3 earnings report, surpassing expectations in earnings per share (EPS) at $1.00, a delightful $0.05 higher than the estimated $0.95. While revenues reached $9.17 billion, showcasing a robust 12.5% YoY growth, they slightly missed the projected $9.29 billion.

Global comparable store sales experienced a caffeinated boost with a 10% increase, driven by a 5% rise in comparable transactions and a 4% increase in average ticket. Notably, North America and U.S. comparable store sales grew by 7%, fueled by a 6% surge in average ticket and a 1% increase in comparable transactions. International comparable store sales saw a significant leap of 24%, supported by a 21% surge in comparable transactions and a 2% increase in average ticket. China's comparable store sales soared by an impressive 46%.

During the quarter, Starbucks expanded its global footprint with 588 net new stores, reaching a total store count of 37,222. The U.S. and China stores constituted 61% of the global portfolio, with 16,144 and 6,480 stores, respectively.

In the International segment, net revenues climbed by 24% over Q3 FY22 to $2 billion in Q3 FY23. Despite a 5% unfavorable impact from foreign currency translation, growth was attributed to a 24% rise in comparable store sales, a 11% increase in net new company-operated stores over the past 12 months, and higher product sales and royalty revenues in licensed stores.

Moving into Q1 FY24, Starbucks reported revenue of $9.43 billion, an 8.2% YoY increase, and EPS (non-GAAP) of $0.90, reflecting an improvement from $0.75 per share in the same quarter last year. Free Cash Flow surged to $1.79 billion, marking a 43.6% increase from the previous quarter.

While Same-Store Sales grew by 5% YoY, slightly missing expectations of a 6.7% increase, Starbucks continues its growth trajectory with a commendable annualized revenue growth rate of 8% over the last four years. With 38,587 store locations as of quarter-end, the company's consistent efforts to expand its customer base and drive sales at existing locations remain evident. Despite minor variances from analyst expectations, Starbucks's renowned brand equity continues to be a magnet for loyal customers.