News

Starbucks beats Q4 expectations

The Starbucks Rewards loyalty program grew to 17.6 million active members in the U.S., up 15% year-over-year.

October 31, 2019

Starbucks CEO Kevin Johnson was hyped up Wednesday, and it had less to do with caffeine and more with the chain beating expectations for the 13-week fiscal fourth quarter and the 52-week fiscal year.

"I'm very pleased with our strong finish to fiscal 2019, as we sustained positive momentum across each of our business segments," Johnson said during an earnings call with investors. "Our U.S. business delivered 6% comparable store sales growth in the fourth quarter, while China grew comparable store sales by 5% and total transactions by 13%. Our strong performance throughout fiscal 2019 gives us confidence in a robust operating outlook for fiscal 2020."

Wall Street was expecting, the following:

• Earnings per share: 70 cents, adjusted, vs. 70 cents expected.
• Revenue: $6.75 billion vs. $6.68 billion expected.
• Global same-store sales: 5% vs. 4% expected.

"We are making meaningful progress against our strategic priorities while streamlining the company, bringing more focus and discipline to everything we do," Johnson said. "The investments we are making for the long term — in our partners, our stores, beverage innovation and digital — are collectively delivering an elevated Starbucks Experience, as evidenced by all-time-high customer connection scores in the fourth quarter. This long-term focus is instrumental to how we are building an enduring company."

Q4 2019 highlights:

• Global comparable store sales up 5%, driven by a 3% increase in average ticket and a 2% increase in comparable transactions.
• Americas and U.S. comparable store sales up 6%, both driven by a 3% increase in average ticket and a 3% increase in comparable transactions.
• International comparable store sales up 3%, driven by a 3% increase in average ticket and a 1% increase in transactions; China comparable store sales increased 5%, with comparable transactions up 2%
• Opened 630 net stores in Q4, yielding 31,256 stores at the end of the quarter, a 7% increase over the prior year.
• Consolidated net revenues of $6.7 billion grew 7% over the prior year.
• GAAP operating margin expanded 90 basis points year-over-year to 16.1%, primarily due to sales leverage, cost savings initiatives, lapping prior-year Nestlé transaction-related costs and lower restructuring and impairment charges, partially offset by growth in wages and benefits, increased investments in labor hours and the 2019 Starbucks Leadership Experience.
• Returned $2.7 billion to shareholders through a combination of share repurchases and dividends.
• Starbucks Rewards loyalty program grew to 17.6 million active members in the U.S., up 15% year-over-year.

Full-year fiscal 2019 highlights

• Global comparable store sales up 5%, driven by a 3% increase in average ticket and a 1% increase in comparable transactions.
• Americas and U.S. comparable store sales up 5%, both driven by a 3% increase in average ticket and a 2% increase in comparable transactions.
• International comparable store sales up 3%, driven by a 2% increase in average ticket and a 1% increase in comparable transactions; China comparable store sales increased 4%, with comparable transactions flat.
• Consolidated net revenues of $26.5 billion grew 7% over the prior year.
• GAAP operating margin declined 30 basis points year-over-year to 15.4%.
• Non-GAAP operating margin of 17.2% declined 80 basis points compared to the prior year.