Starbucks reported third fiscal quarter earnings of 62 cents a share, narrowly beating Wall Street forecasts for 61 cents a share. Results were mixed during Howard Schultz’s final quarter as chairman, with same-store sales falling 2 percent in the once-booming China amid fierce competition and stricter regulations on delivery services.
Globally, however, comparable sales slightly exceeded expectations. Starbucks said its same-store sales rose just 1 percent globally and in its U.S. cafes in its third quarter ended July 1.
Revenue rose to a record high $6.3 billion from $5.7 billion in the year prior.
The company said it now expects full-year same-store sales growth to be “just below” its 3% to 5% targeted range, and sees fourth-quarter growth at the lower end of its 3 percent to 5 percent range.
Q3 Fiscal 2018 Highlights
- Global comparable store sales increased 1%, driven by a 3% increase in average ticket
- Americas and U.S. comparable store sales increased 1%
- CAP comparable store sales decreased 1%
- China comparable store sales decreased 2%
- Consolidated net revenues of $6.3 billion, up 11% over the prior year including:
- 3% net benefit from consolidation of the acquired East China business and other streamline-driven activities, including Teavana mall store closures, the Tazo divestiture, and the conversion of certain international retail operations from company-owned to licensed models
- 1% benefit from foreign currency translation
- GAAP operating margin, inclusive of restructuring and impairment charges, declined 190 basis points year-over-year to 16.5%
- Non-GAAP operating margin of 18.5% declined 230 basis points compared to the prior year
- GAAP Earnings Per Share of $0.61, up 30% over the prior year
- Non-GAAP EPS of $0.62, up 13% over the prior year
- GAAP and non-GAAP EPS include $0.02 of unfavorability associated with May 29th anti-bias training
- Starbucks Rewards™ loyalty program added 1.9 million active members in the U.S., up 14% year-over-year; total member spend now represents 40% of U.S. company-operated sales
- Mobile Order and Pay represented 13% of U.S. company-operated transactions
- The company opened 511 net new stores in Q3 and now operates 28,720 stores across 77 markets
- The company returned $1.3 billion to shareholders through a combination of dividends and share repurchases
“Starbucks record performance in Q3 reflects successful execution against our strategic growth priorities and our commitment to deliver predictable, sustainable growth at scale – and meaningful increases in long-term value – for our shareholders,” said Kevin Johnson, Starbucks ceo and president.
“We remain confident in our global growth strategies, in the sustainability of our leadership position around all things coffee and tea and in our leadership teams around the world to navigate our next phase of growth.”
“Starbucks record Q3 revenues and profits once again reflect the underlying strength of the Starbucks business and brand all around the world,” said Scott Maw, cfo.
“We continue to grow share in virtually every market and channel in which we operate at the same time that our streamline initiatives are enabling us to sharpen our focus – and leverage our resources – against our highest value, long-term growth opportunities.”
