MILAN – Starbucks‘ stock closed up 2% in after-hour trading yesterday, following the release of the company’s financial results for its 13-week fiscal third quarter ended June 30, 2024, which showed results below expectations for sales, but in line with analysts’ consensus for earnings. Starbucks reported third quarter EPS of $0.93, in line with the analyst estimate of $0.93. Revenue for the quarter came in at $9.1 billion versus the consensus estimate of $9.25B.
Starbucks’s stock price closed at $75.93. It is up 3.86% in the last 3 months and down 25.24% in the last 12 months.
In an earnings call, CEO Laxman Narasimhan called the current consumer environment “complex,” saying the company is doing all it can to regain its footing as a premium player.
He added that he has “full confidence in the long-term potential of Starbucks worldwide.”
“We are not satisfied with the results, but our actions are making an impact,” he said. Key indicators are “trending in the right direction … and our runway for improvement is long.”
Starbucks is implementing a three-part action plan for the US that was introduced following its lackluster Q2 results.
“Our efficiency efforts, which are tracking ahead of expectations, partially offset investments associated with the cautious consumer environment,” commented Rachel Ruggeri, chief financial officer. “Collectively, our disciplined approach enables us to preserve both balance sheet strength and flexibility, positioning us to successfully navigate through the current macroeconomic environment,” Ruggeri added.
“Starbucks’ struggles reflect consumer fatigue with high prices at food chains, restaurants and stores after years of price hikes” commented CNN. “They also reveal cracks in Starbucks’ business model, which has changed in response to customer demand from a predominately sit-down coffee shop to a mostly drive-thru and mobile takeout chain.”
STarbucks: Q3 Fiscal 2024 Highlights
- Global comparable store sales declined 3%, driven by a 5% decline in comparable transactions, partially offset by a 2% increase in average ticket
- North America comparable store sales declined 2%, driven by a 6% decline in comparable transactions, partially offset by a 3% increase in average ticket; U.S. comparable store sales declined 2%, driven by a 6% decline in comparable transactions, partially offset by a 4% increase in average ticket
- International comparable store sales declined 7%, driven by a 4% decline in average ticket and a 3% decline in comparable transactions; China comparable store sales declined 14%, driven by a 7% decline in both average ticket and comparable transactions
- The company opened 526 net new stores in Q3, ending the period with 39,477 stores: 52% company-operated and 48% licensed
- At the end of Q3, stores in the U.S. and China comprised 61% of the company’s global portfolio, with 16,730 and 7,306 stores in the U.S. and China, respectively
- Consolidated net revenues declined 1% to $9.1 billion, or a 1% increase on a constant currency basis
- GAAP operating margin contracted 60 basis points year-over-year to 16.7%, primarily driven by increased promotional activity, investments in store partner wages and benefits, and deleverage. This contraction was partially offset by pricing and in-store operational efficiencies.
- Non-GAAP operating margin contracted 70 basis points year-over-year to 16.7% on a constant currency basis
- GAAP earnings per share of $0.93 declined 6% over prior year
- Non-GAAP earnings per share of $0.93 declined 7% over prior year, or declined 6% on a constant currency basis
- Starbucks Rewards loyalty program 90-day active members in the U.S. totaled 33.8 million, up 7% year-over-year
