Coffee Service

Starbucks boosts Q1 2024 results, but misses expectations

Image: Starbucks

January 31, 2024

Starbucks boosted its sales and earnings for Q1 2024 but cut its full year guidance after missing its sales and earnings projections. Highlights from an earnings report are as follows:

• Total revenues rose 8.2% from $8.7 billion in Q1 2023 to $9.4 billion for the quarter ending Dec. 31, 2023.
• Revenue for company-operated stores rose 9.5% from $7.08 billion to $7.75 billion in the comparative quarters.
• Net earnings rose 19.8% from $855.2 million to $1.01 billion.
• Net earnings per common share on a diluted basis rose 21.6% from 74 cents to 90 cents.
• North America revenues rose 9% from $6.55 billion to $7.12 billion, primarily driven by a 5% increase in comparable store sales, driven by a 4% increase in average ticket and a 1% increase in comparable transactions, net new company-operated store growth of 4% over the past 12 months, as well as growth in licensed store business.
• International revenues rose 9.9% from $1.68 billion to $1.846 billion, primarily driven by net new company-operated store growth of 12% over the past 12 months and a 7% increase in comparable store sales, driven by an 11% increase in comparable transactions and a 3% decline in average ticket.
• Revenue for licensed stores rose 6.5% from $1.12 billion to $1.19 billion.
• Revenue from "other" stores fell 6.4% from $510.9 million to $478 million.
• Global comparable store sales increased 5%, driven by a 3% increase in comparable transactions and 2% increase in average ticket.
• North America and U.S. comparable store sales increased 5%, driven by a 4% increase in average ticket and 1% increase in comparable transactions
• International comparable store sales increased 7%, driven by a 11% increase in comparable transactions and 3% decline in average ticket; China comparable store sales increased 10%, driven by a 21% increase in comparable transactions and 9% decline in average ticket.
• The company opened 549 net new stores in Q1, ending the period with 38,587 stores: 51% company-operated and 49% licensed.
• Net revenues for the international segment grew 10% over Q1 FY23 to $1.8 billion in Q1 FY24, primarily driven by net new company-operated store growth of 12% over the past 12 months and a 7% increase in comparable store sales, driven by an 11% increase in comparable transactions and a 3% decline in average ticket. These increases were partially offset by approximately 2% unfavorable impact from foreign currency translation.
• Net revenues for the channel development segment declined 6% to $448 million, primarily due to a decline in revenue in the Global Coffee Alliance following the sale of Seattle's Best Coffee brand in Q2 FY23 and a decrease in global ready-to-drink revenue.

Shares traded today at $94.10 against a 52-week range of $89.21 to $115.48.

The $9.4 billion in quarterly revenue missed analyst expectations by $230 million, while the non-GAAP EPS of 90 cents missed expectations by 4 cents, according to Seeking Alpha.

"Despite headwinds, our brand is very strong, and that coupled with innovation and a relentless focus on our green apron partners form long-term differentiators, along with focused execution on Triple Shot Reinvention, will drive balanced and attractive earnings growth," CEO Laxman Narasimhan said in the press release.

The company cut its full-year sales and guidance after missing its expectations, and now expects 2024 total revenue growth to be 7% to 10%, versus the previous expectation of 10% to 12%, according to Yahoo Finance. U.S. and global same-store sales are expected to increase 4% to 6%, both down from the previous 5% to 7% range.