Starbucks on Tuesday reported quarterly earnings that beat analysts’ expectations, but its same-store sales missed Wall Street’s estimates.
Still, the company reaffirmed its fiscal 2023 outlook during its conference call. Starbucks is projecting revenue growth of 10% to 12%. The company slightly raised its adjusted earnings-per-share growth outlook to 16% to 17% from the low end of 15% to 20%.
Shares of the company fell less than 1% in extended trading.
Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:
- Earnings per share: $1 adjusted vs. 95 cents expected
- Revenue: $9.17 billion vs. $9.29 billion expected
The coffee giant reported fiscal third-quarter net income attributable to Starbucks of $1.41 billion, or 99 cents per share, up from $912.9 million, or 79 cents per share, a year earlier.
The company’s operating margin expanded to 17.3% from 15.9%, driven by improvements in productivity and higher menu prices.
Excluding items, Starbucks earned $1 per share.
Net sales rose 12% to $9.17 billion.
The company’s same-store sales grew 10%, falling short of StreetAccount estimates of 11%. Same-store sales growth in both North America and its international markets was softer than expected.
The coffee giant’s North American same-store sales grew 7%, missing estimates of 8.4%.
Still, demand remains strong in the company’s domestic market. Starbucks said customer traffic grew 1% in the quarter. What’s more, customers were buying more breakfast sandwiches along with their coffee orders and adding pricey extras like cold foam to beverages.
“We actually see growth in our largest sizes over our smaller sizes, so we’re not seeing down trading in our customer base,” CEO Laxman Narasimhan told analysts on the company’s conference call.
Cold drinks accounted for three quarters of U.S. beverage orders as consumer preferences continue to shift away from hot coffee.
Outside North America, Starbucks’ same-store sales increased 24%, falling short of estimates of 24.2%.
Improved demand in China, the company’s second largest market, fueled the company’s international growth. China’s same-store sales skyrocketed 46% in the quarter.
