Starbucks Q1 numbers miss expectations

Although Starbucks Corporation Thursday reported that global same-store sales rose 2 percent last quarter, they were below the 3 percent average of analysts' estimates, according to Consensus Metrix. Comparable-store sales also missed projections in North America and were down in Europe, the Middle East and Africa. China sales, however, grew by 6 percent.

CEO and President Kevin Johnson remained positive about the chain's performance. 

"Starbucks reported another quarter of record financial results in Q1 of fiscal 2018, with consolidated revenues up 6 percent over last year — up 7 percent excluding 1 percent for the impact of streamlining activities in the quarter. China grew revenues 30 percent in Q1, with the strategic acquisition of East China positioning us to accelerate our growth in the key China market," he said in a company press release. "Today, Starbucks has two powerful, independent but complementary engines driving our global growth, the U.S. and China. Our work to streamline the company is sharpening our focus on our core operating priorities."

Q1 fiscal 2018 highlights

  • Global comparable store sales increased 2 percent, driven by a 2-percent increase in average ticket.
  • Americas and U.S. comp store sales increased 2 percent, driven by a 2-percent increase in average ticket.
  • CAP comp store sales increased 1 percent, driven by a 1-percent increase in transactions.
  • China comp store sales increased 6 percent, driven by a 6-percent increase in transactions.
  • Consolidated net revenues of $6.1 billion grew 6 percent versus the prior year.
  • GAAP operating margin of 18.4 percent declined 140 basis points compared to the prior year; non-GAAP operating margin of 19.2 percent declined 80 basis points.
  • GAAP earnings per share of $1.57 included $0.79 of net gain related to the acquisition of East China and a $0.13 net benefit from other items which are excluded from non-GAAP results.
  • Non-GAAP EPS grew 25 percent to $0.65 per share and included a $0.07 benefit from changes in the U.S. tax law.
  • Active membership in Starbucks Rewards in the U.S. grew 11 percent versus the prior year to 14.2 million, with member spend representing 37 percent of U.S. company-operated sales, and mobile order and pay representing 11 percent of U.S. company-operated transactions.
  • Starbucks Card reached 42 percent of U.S. and Canada company-operated transactions.
  • The company opened 700 net new stores globally, bringing total store count to 28,039 across 76 markets.
  • The company returned a record $2 billion to shareholders in the quarter through a combination of dividends and share repurchases.

"Starbucks delivered solid revenue and profit growth and our first ever $6 billion revenue quarter in Q1," CFO Scott Maw said. "We are laser-focused on accelerating growth in China and driving improvement across the U.S. business as we move into and through the back half of the year, and remain committed to delivering on the long-term targets we announced last quarter."
 
Fiscal 2018 Targets
The company reiterated the following full year FY18 targets, with the exception of earnings per share, which has been modified for the expected net impact of changes in the U.S. tax law and related reinvestments. 

  • Continue to expect approximately 2,300 net new stores globally.
  • Continue to expect 3-5 percent comparable store sales growth globally, and expect to be near the low end of the range for the year.
  • Continue to expect consolidated revenue growth in the high single digits consistent with long term guidance; when including approximately 2 percent of net favorability related to the acquisition of East China and other streamlining activities, consolidated revenue growth of approximately 9-11 percent in FY1 is expected.
  • Expect GAAP EPS in the range of $3.32 to $3.36 and non-GAAP EPS in the range of $2.48 to $2.53, consistent with guidance issued last quarter but updated to include the expected net impact of the new U.S. tax law's federal statutory tax rate and related reinvestments.

Topics: Trends / Statistics

Companies: Starbucks


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