Starbucks Corp., the world’s biggest coffee-shop chain, reported a 10% rise in revenues to $4.18 billion in the fiscal fourth quarter, thanks to a steady increase in new stores.
However, the performance missed analysts’ consensus estimate of $4.24 billion. Wall Street was disappointed, having hoped for faster revenue growth. Starbucks shares fell 4% in after-hours trading.
In addition to that, the Seattle-based coffee chain reported a 5% gain for same-store sales in Starbucks’ Americas region gained 5 percent in the quarter, trailing the average estimate for a 6.2 percent increase, according to owned by Kaul Advisory Group in Wayne, New Jersey..
In Europe, the Middle East and Africa, sales at cafes open 13 months or longer rose 5 percent, compared with analysts’ estimates of 3.3 percent growth, according to Consensus Metrix. Sales by that measure also climbed 5 percent in China and Asia Pacific, trailing projections for a 7.4 percent gain.
Starbucks got 74 percent of revenue from its cafes in the U.S., Canada and Latin America in fiscal 2013.
Overall, Starbucks reported a profit for the period ended Sept. 28 of $587.9 million, or 77 cents a share, compared with a loss of $1.23 billion, or $1.64 a share, in the year-earlier period when the company paid about $2.78 billion to resolve a dispute with Kraft Foods over its packaged-coffee business.
Excluding special items, earnings rose to 74 cents a share from 60 cents, in line with the company’s expectation of 73 cents to 75 cents a share.
Starbucks also forecast fiscal 2015 revenue growth of 16 to 18 percent, including more than $1 billion in incremental revenue from the planned acquisition of Starbucks Japan.
The report from the world’s biggest coffee chain came on the heels of disappointing news from breakfast rivals McDonald’s Corp (MCD.N) and Dunkin’ Donuts parent Dunkin’ Brands (DNKN.O).
“We are in the same kind of difficult retail traffic environment as our competitors are,” Chief Operating Officer Troy Alstead said in an interview. More people are shopping online instead of being out in brick-and-mortar stores, he said.
Starbucks also is coping with higher coffee-bean and dairy prices. About two-thirds percent of the company’s coffee needs are locked for this fiscal year, Alstead also said.
Delivery service to be launched in select markets
The coffee retailer is planning to launch a food and beverage delivery service in select markets during the second half of next year, CEO Howard Schultz said on the company’s earnings conference call Thursday. “Imagine the ability to create a standing order of Starbucks delivered hot to your desk daily,” Schultz said. “That’s our version of e-commerce on steroids.” The delivery service will be available to Starbucks loyalty program members as part of its new mobile order and pay app that will launch in Portland, Oregon, next month and nationwide next year.
Q4 Fiscal 2014 Highlights:
- Consolidated net revenues increased 10% to a Q4 record $4.2 billion
- Global comparable store sales increased 5%, the 19th consecutive quarter of comp growth of 5% or greater
- Consolidated operating income reached $854.9 million
Non-GAAP operating income of $857.3 million grew 28% over Q4 FY13 non-GAAP operating income
- Consolidated operating margin expanded to 20.4%
Non-GAAP operating margin of 20.5% grew 280 basis points over Q4 FY13 non-GAAP operating margin
- Earnings per share reached $0.77
Non-GAAP EPS of $0.74 grew 23% over Q4 FY13 non-GAAP EPS
- The company opened 503 net new stores in the quarter, ending FY14 with 21,366 stores in 65 countries
- The Board of Directors declared a cash dividend of $0.32 per share, an increase of 23%
Fiscal Year 2014 Highlights:
- Consolidated net revenues increased 11% to a record $16.4 billion
- Global comparable store sales increased 6%
Americas comp sales increased 6%
EMEA comp sales increased 5%
China/Asia Pacific comp sales increased 7%
- Consolidated operating income reached $3.1 billion
Non-GAAP operating income of $3.1 billion grew 25% over FY13 non-GAAP operating income
- Consolidated operating margin expanded to 18.7%
Non-GAAP operating margin of 18.6% grew 210 basis points over FY13 non-GAAP operating margin
- Earnings per share reached $2.71
Non-GAAP EPS of $2.66 grew 21% over FY13 non-GAAP EPS
- Starbucks opened 1,599 net new stores globally in FY14, including 742 in CAP, 698 in the Americas and 171 in EMEA
- The company returned $1.6 billion to shareholders through dividends and share repurchases.
