SEATTLE, U.S. – Starbucks reported better-than-expected earnings that beat Wall Street’s estimates on revenue, profit and same-store sales.
In the U.S. and Americas, sales at stores open for at least a year grew 4 percent during Starbucks’ fiscal fourth quarter, beating analysts’ forecast of 2.7 percent.
It was the company’s strongest same-store sales growth in the U.S. in five quarters, Kevin Johnson, CEO of Starbucks said during an earnings call Thursday.
The Seattle-based company said it had profit of US56 cents per share. Earnings, adjusted for non-recurring costs, were US62 cents per share.
The results beat Wall Street expectations. The average estimate of 13 analysts surveyed by Zacks Investment Research was for earnings of US59 cents per share.
In the quarter, Starbucks continued to focus on its cold beverage platform, which includes cold brew, nitro cold brew, refreshers and cold foam, as customers have been craving more iced drinks than hot ones.
Q4 Fiscal 2018 Highlights
- Global comparable store sales increased 3%, driven by a 4% increase in average ticket
◦ Americas and U.S. comparable store sales increased 4%
◦ CAP and China comparable store sales increased 1%
- Consolidated net revenues of $6.3 billion, up 11% over the prior year
◦ Adjusted for an approximately 2% net benefit from streamline-driven activities, and approximately 1% headwind from unfavorable foreign currency translation, consolidated net revenues grew 9% over the prior year
◦ Streamline-driven activities include the consolidation of the acquired East China business, partially offset by licensing our CPG and foodservice businesses to Nestlé following the close of the deal on August 26, 2018, Teavana mall store closures, and the conversion of certain international retail operations from company-owned to licensed models
- GAAP operating margin, inclusive of restructuring and impairment charges, declined 270 basis points year-over-year to 15.2%
◦ Non-GAAP operating margin of 18.1% declined 190 basis points compared to the prior year
- GAAP Earnings Per Share of $0.56, up 4% over the prior year
◦ Non-GAAP EPS of $0.62, up 13% over the prior year
- Starbucks RewardsTM loyalty program grew to 15.3 million active members in the U.S., up 15% year-over-year
- Mobile Order and Pay represented 14% of U.S. company-operated transactions
- The company opened 604 net new stores in Q4 and now operates 29,324 stores across 78 markets
- The company returned $3.6 billion to shareholders through a combination of dividends and share repurchases
Fiscal Year 2018 Highlights
- Global comparable store sales increased 2%, driven by a 3% increase in average ticket
◦ Americas and U.S. comparable store sales increased 2%
◦ CAP comparable store sales increased 1%
▪ China comparable store sales increased 2%
- Consolidated net revenues of $24.7 billion, up 10% over the prior year
◦ Adjusted for an approximately 2% net benefit from streamline-driven activities, and approximately 1% benefit from favorable foreign currency translation, consolidated net revenues grew 8% over the prior year
◦ Streamline-driven activities include the consolidation of the acquired East China business, partially offset by Teavana mall store closures, the conversion of certain international retail operations from company-owned to licensed models, licensing our CPG and foodservice businesses to Nestlé following the close of the deal on August 26, 2018, and the sale of our Tazo brand in Q1 FY18
- GAAP operating margin, inclusive of restructuring and impairment charges, declined 280 basis points year-over-year to 15.7%
◦ Non-GAAP operating margin of 18.0% declined 170 basis points compared to the prior year
- GAAP Earnings Per Share of $3.24, up 64% over the prior year
◦ Non-GAAP EPS of $2.42, up 17% over the prior year
- The company returned $8.9 billion to shareholders through a combination of dividends and share repurchases
“Starbucks record Q4 performance reflected meaningful improvement in virtually every critical operating metric compared to Q3,” said Kevin Johnson, ceo. “As we enter fiscal 2019, we are executing against a clear growth agenda, with a focus on our long-term growth markets of the U.S. and China. We are also excited about the long-term growth potential of our new Global Coffee Alliance with Nestlé. I’m incredibly proud of our 350,000 Starbucks partners around the world and pleased with the continued progress in our growth agenda.”
“In Q4, Starbucks delivered improved sequential results in both our Americas and China/Asia Pacific segments. We also further set the stage for increased benefits from our ongoing efforts to streamline the company,” said Scott Maw, cfo. “Each of these factors contributed to the record Q4 results we reported today and position us well for fiscal 2019 and beyond. As always, credit for Starbucks performance belongs to our store partners all around the world who proudly wear the green apron and deliver an elevated Starbucks Experience to our customers, every day.”
