MILAN — Starbucks on Tuesday reported record revenue in its fiscal first quarter but the results missed Wall Street’s projections as customer spending slowed in some key markets. The U.S. coffee giant posted consolidated net revenues of $9.4 billion (+8%) in its 13-week fiscal first quarter 2024, ending Dec. 31, 2023. That was lower than the $9.6 billion analysts had forecast, according to FactSet.
The operating income increased to $1.5 billion dollars, up by 25 percent from a year ago.
Same-store sales, or sales at stores open at least a year, rose 5%; analysts had forecast a 7% increase.
Starbucks said its net income rose 20% to just over $1 billion, or 90 cents per share. Analysts had forecast earnings of 93 cents per share.
In the U.S., same-store sales rose 5% in the quarter. Customer transactions rose 1% and consumers spent more per order. In China — Starbucks’ second-largest market — results were mixed. Transactions were up 21% but average spending per order fell 9%.
The company opened 549 net new stores in the first quarter, ending the period with 38,587 stores.
At the end of the quarter, stores in the United States and China comprised 61 percent of the company’s global portfolio, with 16,466 and 6,975 stores respectively.
Starbucks: Q1 Fiscal 2024 Highlights
- 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
- At the end of Q1, stores in the U.S. and China comprised 61% of the company’s global portfolio, with 16,466 and 6,975 stores in the U.S. and China, respectively
- Consolidated net revenues up 8%, including on a constant currency basis, to a record $9.4 billion
- GAAP operating margin expanded 140 basis points year-over-year to 15.8%, primarily driven by sales leverage and in-store operational efficiencies. This expansion was partially offset by investments in store partner wages and benefits, as well as higher general and administrative costs in support of Reinvention.
- Non-GAAP operating margin expanded 130 basis points to 15.8% from 14.5% year-over-year, including on a constant currency basis
- GAAP earnings per share of $0.90 grew 22% over prior year
- Non-GAAP earnings per share of $0.90 grew 20% over prior year, including on a constant currency basis
- Starbucks Rewards loyalty program 90-day active members in the U.S. increased to 34.3 million, up 13% year-over-year
“Our first quarter performance was strong on many measures. Of note was the unwavering commitment of our most loyal customers, the growth in rewards members, tender and spend per member,” commented Laxman Narasimhan, chief executive officer.
“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,” Narasimhan added.
“I am proud of the significant margin expansion and double-digit earnings growth we delivered in our first quarter, as it underscores our multiple paths to earnings growth,” commented Rachel Ruggeri, chief financial officer. “We are executing on several levers within those multiple paths to continue delivering against our balanced growth model over the remainder of the year,” Ruggeri added.
Q1 North America Segment Results
Net revenues for the North America segment grew 9% over Q1 FY23 to $7.1 billion in Q1 FY24, 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 our licensed store business.
Operating income increased to $1.5 billion in Q1 FY24 compared to $1.2 billion in Q1 FY23. Operating margin of 21.4% expanded from 18.5% in the prior year, primarily driven by in-store operational efficiencies and sales leverage. This expansion was partially offset by investments in store partner wages and benefits in support of Reinvention.
Q1 International Segment Results
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.
Operating income increased to $241.5 million in Q1 FY24 compared to $240.4 million in Q1 FY23. Operating margin of 13.1% contracted from 14.3% in the prior year, primarily driven by investments in store partner wages and benefits, business mix shift and strategic investments. This contraction was partially offset by sales leverage.
