Starbucks (SBUX Quick QuoteSBUX - Free Report) reported mixed results for third-quarter fiscal 2023 on Aug 1. The recovering demand from China has gone a long way in providing some support to the quarterly results. The company has a VGM Score of B (as of Aug 4).

The world’s largest coffee house chain belongs to the Zacks Retail and Wholesale sector and currently has a Zacks Rank #3 (Hold).The Zacks Retail sector lies in the top 25% of the Zacks Industry Rank.

Earnings in Focus

Starbucks has reported adjusted earnings per share (EPS) of $1, which beat the Zacks Consensus Estimate of 95 cents by 5.3%. The bottom line increased 19% year over year from an adjusted EPS of 84 cents reported in the prior-year quarter.

Quarterly revenues of $9,168.3 million lagged the Zacks Consensus Estimate of $9,290 million by 1.3%. However, the top line increased by 12.5% on a year-over-year basis. The rise mainly came from higher sales in existing stores and more new stores added compared to the previous year.

The company’s robust revenues from the global licensed store business was another positive, increasing 10% year over year and beating the Zacks model estimate of 8.5%.

Segmental Details

According to Reuters, the company has focused on its younger, more affluent customer demographic in the United States, introducing new beverages and highlighting food choices that have contributed to an increase in average customer spending.

SBUX’s North America segment’s fiscal third-quarter net revenues were $6,737.8 million, up 11% year over year, supported by growth in company-operated comparable store sales (of 7%), net new company-operated store growth (4%) and strong licensed store sales.

International segment’s fiscal third-quarter net revenues were $1,972.9 million, up 24% year over year, primarily due to a 24% gain in comparable store sales, net new store growth of 11% and growth in its licensed store revenues.

Guidance

For fiscal 2023, the company anticipates global comparable sales to reach the high end of the 7-9% target. During the year, the company expects store count in the United States and China to grow approximately 3% and 13%, respectively, on a year-over-year basis.

ETFs in Focus

Investors wanting to invest in the coffee house chain, can consider the following ETFs with exposure to the company.

Alpha Dog ETF (RUFF Quick QuoteRUFF - Free Report)

Alpha Dog ETF employs an active strategy and seeks capital appreciation by investing primarily in the equity securities of large to mid-capitalization U.S. companies. The fund has a basket of 29 securities along with an asset base of $53.58 million. RUFF charges an annual fee of 0.94%.

Alpha Dog ETF has an exposure of 4.42% in SBUX and has fallen around 3.95% in the past week (as of Aug 4).

Consumer Discretionary Select Sector SPDR Fund (XLY Quick QuoteXLY - 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 $16.96 billion and charges an annual fee of 0.10%.

Consumer Discretionary Select Sector SPDR has an exposure of 3.68% in SBUX and has a Zacks ETF Rank #1 (Strong Buy), along with a Medium risk outlook. The fund has returned about 1.72% in the last week (as of Aug 4).

Democratic Large Cap Core ETF (DEMZ Quick QuoteDEMZ - Free Report)

Democratic Large Cap Core ETF seeks to track the performance of the Democratic Large Cap Core Index with a basket of 47 securities. The fund has gathered an asset base of $24.88 billion and charges an annual fee of 0.45%.

Democratic Large Cap Core ETF has an exposure of 3.42% in SBUX and has fallen around 2.15% in the past week (as of Aug 4).