News

Starbucks blasts Q3 expectations

CEO Kevin Johnson said Starbucks two targeted long-term growth markets, the U.S. and China, performed extremely well.

July 25, 2019

Starbucks shares jumped 6% Wednesday after the company reported solid growth, especially in its target areas of the Americas and Asia. Global comparable store sales for the 13-week fiscal third quarter, ending June 30, increased 6%, driven by a 3% increase in average ticket and a 3% increase in comparable transactions, according to a company press release.

The chain's Americas comparable store sales were up by 7%, driven by a 4% increase in average ticket and a 3% increase in transactions. U.S. comparable store sales increased 7%, with transactions up 3%.

The news was almost as good in China/Asia Pacific, where comparable store sales increased 5%, driven by a 3% increase in average ticket and a 2% increase in transactions. China comparable store sales increased 6%, with transactions up 2%, much to the brand's delight as it is facing steep competition from China's coffee start-up, Luckin, as well as Coffee Bean & Tea Leaf, which Philippines-based Jollibee purchased this week.

Earnings per share were 78 cents, and revenue hit $6.8 billion compared to Wall Street's predictions of 72 cents and $6.67 billion, respectively.

"Starbucks delivered strong operating performance in the third quarter, further demonstrating that our 'Growth at Scale' agenda is working," CEO Kevin Johnson said in a company press release "Our two targeted long-term growth markets, the U.S. and China, performed extremely well across a number of measures as a result of our focus on enhancing the customer experience, driving new beverage innovation and accelerating the expansion of our digital customer relationships. Given the strong momentum across our business, we are raising our full-year financial outlook."

Q3 Fiscal 2019 Highlights

• Global comparable store sales increased 6%, driven by a 3% increase in average ticket and a 3% increase in comparable transactions.
• Americas comparable store sales increased 7%, driven by a 4% increase in average ticket and a 3% increase in transactions; U.S. comparable store sales increased 7%, with transactions up 3%.
• China/Asia Pacific comparable store sales increased 5%, driven by a 3% increase in average ticket and a 2% increase in transactions; China comparable store sales increased 6%, with transactions up 2%.
• Opened 442 stores in Q3, yielding 30,626 stores at the end of the quarter, a 7% increase over the prior year. Nearly one-third of net new store openings were in China and 48% were in other international markets.
• Consolidated net revenues of $6.8 billion grew 8% over the prior year.
• Consolidated net revenues grew 11% over the prior year adjusted for unfavorable impacts of approximately 2% from streamline-driven activities and 1% from foreign currency translation.
• Streamline-driven activities included the licensing of CPG and foodservice businesses to Nestlé following the close of the transaction on Aug. 26, 2018, and the conversion of certain international retail operations from company operated to licensed models.
• Returned $581 million to shareholders through a combination of share repurchases and dividends.
• Starbucks Rewards loyalty program grew to 17.2 million active members in the U.S., up 14% year-over-year.