MILAN — Starbucks Corporation on Thursday reported financial results for its 13-week fiscal fourth quarter ended October 1, 2023, that beat Wall Street expectations. Starbucks posted quarterly earnings of $1.06 per share, beating the Zacks Consensus Estimate of $0.97 per share. This compares to earnings of $0.81 per share a year ago. These figures are adjusted for non-recurring items.
This quarterly report represents an earnings surprise of 9.28%. A quarter ago, it was expected that this coffee chain would post earnings of $0.95 per share when it actually produced earnings of $1, delivering a surprise of 5.26%.
Total company revenue rose 11% in the fourth quarter, year over year, hitting a record $9.4 billion. For the full fiscal year, revenue grew 12% for a record of $36 billion. The company also reported revenue increases in China, a key growth market, which has been rebounding from Covid-related closures. Starbucks’ financial results beat Wall Street’s expectations.
Q4 Fiscal 2023 Highlights
- Global comparable store sales increased 8%, driven by a 4% increase in average ticket and 3% increase in comparable transactions
- North America and U.S. comparable store sales increased 8%, driven by a 6% increase in average ticket and 2% increase in comparable transactions
- International comparable store sales increased 5%, driven by a 6% increase in comparable transactions and 1% decline in average ticket; China comparable store sales increased 5%, driven by an 8% increase in comparable transactions and a 3% decline in average ticket
- The company opened 816 net new stores in Q4, ending the period with 38,038 stores: 52% company-operated and 48% licensed
- At the end of Q4, stores in the U.S. and China comprised 61% of the company’s global portfolio, with 16,352 and 6,806 stores in the U.S. and China, respectively
- Consolidated net revenues up 11%, to a record $9.4 billion, or 12%, excluding a 1% unfavorable impact from foreign currency translation
- GAAP operating margin of 18.2% increased from 14.2% in the prior year, primarily driven by in-store operational efficiencies, sales leverage and pricing. This expansion was partially offset by previously committed investments in store partner wages and higher general and administrative costs related to our Reinvention Plan.
- Non-GAAP operating margin of 18.2% increased from 15.1% in the prior year
- GAAP earnings per share of $1.06 grew 39% over prior year
- Non-GAAP earnings per share of $1.06 grew 31% over prior year
- Starbucks Rewards loyalty program 90-day active members in the U.S. increased to 32.6 million, up 14% year-over-year
Full Year Fiscal 2023 Highlights
- Global comparable store sales increased 8%, driven by a 5% increase in average ticket and 3% increase in comparable transactions
- North America and U.S. comparable store sales increased 9%, driven by a 6% increase in average ticket and 3% increase in comparable transactions
- International comparable store sales increased 5%, driven by a 5% increase in comparable transactions; China comparable store sales increased 2%, driven by a 4% increase in comparable transactions and 2% decline in average ticket
- Consolidated net revenues up 12%, to a record $36.0 billion, or 14%, excluding a 2% unfavorable impact from foreign currency translation
- GAAP operating margin of 16.3% increased from 14.3% in the prior year, primarily driven by pricing, sales leverage and in-store operational efficiencies. This expansion was partially offset by previously committed investments in store partner wages and higher general and administrative costs related to our Reinvention Plan.
- Non-GAAP operating margin of 16.1% increased from 15.1% in the prior year
- GAAP earnings per share of $3.58 grew 27% over prior year
- Non-GAAP earnings per share of $3.54 grew 20% over prior year
“We finished our fourth quarter and full fiscal year strong, delivering on the higher end of our full-year guidance. Our Reinvention is moving ahead of schedule, fueling revenue growth, efficiency and margin expansion,” commented Laxman Narasimhan, chief executive officer.
“Notably, we continue to see the positive impact of our Reinvention on our partner and customer experiences, proof points that we can continue to create, grow and strengthen our business while creating value for all. As we enter the current year, in the face of macro uncertainty, we remain confident in the momentum throughout our business and headroom globally. We expect sustained momentum throughout the company for years to come,” Narasimhan added.
“Our strong full fiscal year 2023 performance demonstrated our durable long-term growth and Reinvention plan execution,” commented Rachel Ruggeri, chief financial officer. “We are proud that our full fiscal year 2024 guidance will be grounded on a balance of both revenue growth and margin expansion,” Ruggeri added.
The company said it plans to expand to 35,000 locations outside of North America by 2030. Starbucks currently has roughly 20,200 international cafes, as of Oct. 1. In total, the coffee giant aims to reach 55,000 locations globally by 2030, up from its current count of more than 38,000.
Starbucks announces Triple Shot Reinvention Strategy with multiple paths for long-term growth
Triple Shot Reinvention will focus on three priorities: elevating the Starbucks brand; strengthening the company’s digital capabilities; and becoming truly global; customized with “two pumps” unlocking efficiency and reinvigorating partner culture. This includes:
- Elevate the brand through better run stores, growing the portfolio with more purpose-defined stores and accelerated renovations, and driving further product innovation.
- Strengthen and scale digital by doubling its 75M global Starbucks Rewards Members within five years and expanding digital and technology collaborations to elevate the partner and customer experience.
- Become more global by accelerating store expansion to 55,000 globally by 2030.
- Unlock efficiency to generate $3B in savings over three years – with $2B outside the store – to deliver returns to shareholders through margin expansion and earnings growth.
- Reinvigorate the partner culture through the rollout of the mission, promises and values and through continued investments in the partner value proposition across the partner experience.
