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Starbucks (SBUX - Free Report) reported first-quarter fiscal 2024 results on Jan 30 after market hours. The world’s largest coffee house chain belongs to the Zacks Retail and Wholesale sector. SBUX currently has a Zacks VGM Score of C and a Zacks Rank #4 (Sell).
Breaking Down Earnings
The bottom line surged 20% year over year from adjusted earnings of $0.75 per share reported in the prior-year quarter, reaching $0.90 in fiscal first-quarter 2024. SBUX missed the Zacks Consensus Estimate of $0.92 by 2.2%.
Driven by growth in comparable store sales and net new stores, the top line increased 8.2% year over year to $9.4 billion. However, even after this rise, revenues fell short of the Zacks Consensus Estimate of $9.5 billion.
Solid performances by licensed store businesses added to the positives. Global comparable store sales rose 5% year over year. The upside was backed by growth of 2% and 3% in average tickets and comparable transactions, respectively.
Operational efficiencies within the stores and heightened sales leverage primarily drove the increase in non-GAAP operating margin, reaching 15.8% up from 14.5%. Operating income for the coffee chain in the North America segment surged by 25% from the prior-year quarter.
Geopolitical Challenges Impact Business
According to Reuters, the coffee chain revised down its annual sales projections, cautioning that weakened demand in January and China’s gradual recovery are anticipated to impact its second-quarter performance.
The prevailing tensions in the Middle East negatively impacted the company’s business in the region. The effects of the conflicts were felt in the United States as well, since some customers started boycotts and rallies putting pressure SBUX to address the problem.
According to the coffee chain’s CEO, Laxman Narasimhan, as quoted on CNBC, customer visits in the United States saw a decline from mid-November due to misconceptions regarding the company’s stance on the conflict in the Middle East. Additionally, in a message to employees sent in December, Narasimhan criticized false information and attempted to clear Starbucks of any wrongdoing.
2024 Guidance
SBUX lowered its forecasts for global revenues to 7-10% but reiterated its EPS growth at 15-20%. The company anticipates China's comps growth to be in the low single digits for the remainder of the year, and lowered its U.S. comps growth guidance.
ETFs in Focus
Investors wanting to monitor the coffee house chain can consider the following ETFs with exposure to the company.
Monarch Blue Chips Core ETF seeks to track the performance of the Kingsview Blue Chips Core Index with a basket of 25 securities. The fund has amassed an asset base of $70.01 million and charges an annual fee of 1.25%.
Monarch Blue Chips Core ETF has an exposure of 3.64% in SBUX.
AdvisorShares Restaurant ETF employs an active strategy seeking to invest at least 80% of its net assets in securities of companies that derive at least 50% of their net revenues from the restaurant business. The fund has a basket of 25 securities and has gathered an asset base of $2.79 million. EATZ charges an annual fee of 1.01%.
AdvisorShares Restaurant ETF has an exposure of 3.71 in SBUX.
Brookstone Value Stock ETF employs an active strategy that seeks to invest in companies offering strong value. The fund has a basket of 31 securities and has gathered an asset base of $64.20 million. BAMV charges an annual fee of 0.95%.
Brookstone Value Stock ETF has an exposure of 3.27% in SBUX.
Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report)
Consumer Discretionary Select Sector SPDR Fund seeks to track the performance of the Consumer Discretionary Select Sector Index with a basket of 53 securities. The fund has amassed an asset base of $18.45 billion and charges an annual fee of 0.10%.
Consumer Discretionary Select Sector SPDR Fund has an exposure of 3.23% in SBUX.
Alpha Dog ETF employs an active strategy seeking capital appreciation by investing primarily in the equity securities of large to mid-capitalization U.S. companies. The fund has gathered an asset base of $58.63 million and has a basket of 35 securities. RUFF charges an annual fee of 0.90%.
Alpha Dog ETF has an exposure of 2.95% in SBUX.
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Starbucks Q1 Earnings Miss: ETFs in Focus
Starbucks (SBUX - Free Report) reported first-quarter fiscal 2024 results on Jan 30 after market hours. The world’s largest coffee house chain belongs to the Zacks Retail and Wholesale sector. SBUX currently has a Zacks VGM Score of C and a Zacks Rank #4 (Sell).
Breaking Down Earnings
The bottom line surged 20% year over year from adjusted earnings of $0.75 per share reported in the prior-year quarter, reaching $0.90 in fiscal first-quarter 2024. SBUX missed the Zacks Consensus Estimate of $0.92 by 2.2%.
Driven by growth in comparable store sales and net new stores, the top line increased 8.2% year over year to $9.4 billion. However, even after this rise, revenues fell short of the Zacks Consensus Estimate of $9.5 billion.
Solid performances by licensed store businesses added to the positives. Global comparable store sales rose 5% year over year. The upside was backed by growth of 2% and 3% in average tickets and comparable transactions, respectively.
Operational efficiencies within the stores and heightened sales leverage primarily drove the increase in non-GAAP operating margin, reaching 15.8% up from 14.5%. Operating income for the coffee chain in the North America segment surged by 25% from the prior-year quarter.
Geopolitical Challenges Impact Business
According to Reuters, the coffee chain revised down its annual sales projections, cautioning that weakened demand in January and China’s gradual recovery are anticipated to impact its second-quarter performance.
The prevailing tensions in the Middle East negatively impacted the company’s business in the region. The effects of the conflicts were felt in the United States as well, since some customers started boycotts and rallies putting pressure SBUX to address the problem.
According to the coffee chain’s CEO, Laxman Narasimhan, as quoted on CNBC, customer visits in the United States saw a decline from mid-November due to misconceptions regarding the company’s stance on the conflict in the Middle East. Additionally, in a message to employees sent in December, Narasimhan criticized false information and attempted to clear Starbucks of any wrongdoing.
2024 Guidance
SBUX lowered its forecasts for global revenues to 7-10% but reiterated its EPS growth at 15-20%. The company anticipates China's comps growth to be in the low single digits for the remainder of the year, and lowered its U.S. comps growth guidance.
ETFs in Focus
Investors wanting to monitor the coffee house chain can consider the following ETFs with exposure to the company.
Monarch Blue Chips Core ETF (MBCC - Free Report)
Monarch Blue Chips Core ETF seeks to track the performance of the Kingsview Blue Chips Core Index with a basket of 25 securities. The fund has amassed an asset base of $70.01 million and charges an annual fee of 1.25%.
Monarch Blue Chips Core ETF has an exposure of 3.64% in SBUX.
AdvisorShares Restaurant ETF (EATZ - Free Report)
AdvisorShares Restaurant ETF employs an active strategy seeking to invest at least 80% of its net assets in securities of companies that derive at least 50% of their net revenues from the restaurant business. The fund has a basket of 25 securities and has gathered an asset base of $2.79 million. EATZ charges an annual fee of 1.01%.
AdvisorShares Restaurant ETF has an exposure of 3.71 in SBUX.
Brookstone Value Stock ETF (BAMV - Free Report)
Brookstone Value Stock ETF employs an active strategy that seeks to invest in companies offering strong value. The fund has a basket of 31 securities and has gathered an asset base of $64.20 million. BAMV charges an annual fee of 0.95%.
Brookstone Value Stock ETF has an exposure of 3.27% in SBUX.
Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report)
Consumer Discretionary Select Sector SPDR Fund seeks to track the performance of the Consumer Discretionary Select Sector Index with a basket of 53 securities. The fund has amassed an asset base of $18.45 billion and charges an annual fee of 0.10%.
Consumer Discretionary Select Sector SPDR Fund has an exposure of 3.23% in SBUX.
Alpha Dog ETF (RUFF - Free Report)
Alpha Dog ETF employs an active strategy seeking capital appreciation by investing primarily in the equity securities of large to mid-capitalization U.S. companies. The fund has gathered an asset base of $58.63 million and has a basket of 35 securities. RUFF charges an annual fee of 0.90%.
Alpha Dog ETF has an exposure of 2.95% in SBUX.