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How Are ETFs Reacting to Starbucks' Q2 Earnings Results?

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Starbucks Corporation (SBUX - Free Report) released second-quarter fiscal 2022 results on May 3, after market close. The company’s earnings missed estimates while revenues surpassed the same. Also, earnings declined year over year while revenues improved from the prior-year quarter. Shares of Starbucks have surged about 9.8% since the earnings release. Investors cheered strong U.S. comparable sales despite tough inflationary pressure. The performance of the U.S. business helped to partially make up for the weakness in China due to COVID-related restrictions.

Earnings in Detail

Starbucks reported adjusted earnings per share (EPS) of 59 cents, lagging the Zacks Consensus Estimate of 60 cents. In the prior-year quarter, the company reported adjusted earnings of 61 cents per share. Revenues rose nearly 14.5% year over year to around $7.64 billion and surpassed the Zacks Consensus Estimate of $7.61 billion. The upside was largely supported by the solid contribution from the U.S. business and impressive performance across its diverse global portfolio. Also, the strength in new U.S. company-operated stores (part of the North America Trade Area Transformation initiative) provided support.

Business Update

Starbucks opened 313 net new stores worldwide in the fiscal second quarter, taking the total tally to 34,630. Global store growth was 5.1% on a year-over-year basis.

Meanwhile, global comparable-store sales rose 7% year over year. Global comps improved on a 3% increase in comparable transactions along with a 4% rise in average ticket.

The company’s Active Starbucks Rewards loyalty program expanded to 26.7 million active members in the United States, up 17% on a year-over-year basis.


Starbucks has suspended the plans to discuss guidance for the third and fourth quarter of fiscal 2022. It has cited resurging COVID-19 cases in China and imposition of regional lockdowns, rising inflationary pressures and the major investments that the company has been planning to make as the primary reasons to withhold the guidance.

The company also believes that the remaining of the year can see immense pressure, particularly in the fiscal third quarter.  Starbucks has postponed share repurchases for the rest of this fiscal year but has returned more than $5 billion through share repurchases and quarterly dividend payouts during the first half of fiscal 2022. The company projects share repurchases made earlier in the year to contribute at least 1% to fiscal 2022 EPS growth. The coffee giant aims to offer a detailed update on its business outlook for fiscal 2023 and beyond at Investor Day in September.

ETFs in Focus

Investors might want to take a look at a few ETFs, which have notable exposure to Starbucks and seem to be impacted by the coffee giant’s earnings results:

iShares Evolved U.S. Consumer Staples ETF  — 2.79% exposure to Starbucks

It is an actively-managed fund that employs data science techniques to identify companies exposed to the consumer staples sector. The fund comprises 128 holdings. Its AUM is $17 million and expense ratio is 0.18%. The fund has returned around 2.4% since Starbucks’ earnings release (read: U.S. Economy Shrinks in Q1: ETFs to Win/Lose).

The Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report) — 2.48% exposure

The fund tracks the Consumer Discretionary Select Sector Index and comprises 60 holdings. The fund’s AUM is $17.78 billion and expense ratio is 0.10%. Notably, it has returned around 2.9% since Starbucks’ earnings release (read: Will ETFs Suffer as US Consumer Confidence Dips in April?).

Vanguard Consumer Discretionary ETF (VCR - Free Report) — 1.98% exposure

This fund currently follows the MSCI US Investable Market Consumer Discretionary 25/50 Index. The fund’s AUM is $5.36 billion and expense ratio is 0.10%. The fund has gained 2.85% since Starbucks’ earnings release (read: Yields Hits 3% First Time Since 2018: ETFs to Gain or Lose).

Fidelity MSCI Consumer Discretionary Index ETF (FDIS - Free Report) — 1.82% exposure

This fund tracks the MSCI USA IMI Consumer Discretionary Index. Its AUM is $1.29 billion and expense ratio is 0.08%. However, it has been up around 2.8% since the coffee giant’s earnings release (read: Amazon Posts Slowest Sales Growth in 2 Decades: ETFs in Focus).

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