We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Starbucks Corporation (SBUX - Free Report) reported fourth-quarter fiscal 2023 results, with earnings and revenues beating the Zacks Consensus Estimate. The top and bottom lines increased year over year. Earnings surpassed the consensus estimate for the third straight quarter.
SBUX benefited from robust North America and International sales. Starbucks continues to witness favorable outcomes of its reinvention, evident in the enhanced experiences for both partners and customers. These results serve as compelling evidence that the company can consistently generate, expand and fortify its business while delivering value to all stakeholders.
As it steps into the current year amid macroeconomic uncertainties, Starbucks maintains confidence in the ongoing momentum across its global operations. Anticipating continued success, SBUX expects sustained positive momentum in the years ahead.
Discussion on Earnings, Revenues & Comps
The company reported adjusted earnings per share (EPS) of $1.06, surpassing the Zacks Consensus Estimate of 97 cents by 9.3%. The bottom line jumped 30.9% year over year from adjusted EPS of 81 cents reported in the prior-year quarter.
Quarterly revenues of $9,373.6 million beat the Zacks Consensus Estimate of $9,224 million by 1.6%. The top line rose 11.4% on a year-over-year basis, primarily driven by growth in comparable store sales and net new stores. Also, solid performances in licensed store businesses added to the positives. Global comparable store sales improved 8% year over year. This was backed by growth of 4% and 3% in average tickets and comparable transactions, respectively.
In the fiscal fourth quarter, Starbucks opened 816 net new stores worldwide, bringing the total store count to 38,038.
Starbucks Corporation Price, Consensus and EPS Surprise
On a non-GAAP basis, operating margin was 18.2%, up from 15.1% in the prior-year quarter. The positive outcome was mainly propelled by operational efficiencies within the stores, increased sales leverage and pricing strategies. However, growth was somewhat mitigated by prior investments committed to store partner wages, and elevated general and administrative costs associated with its reinvention Plan.
Segmental Details
Starbucks has three reportable operating segments — North America, International and Channel Development.
North America: Segmental net revenues were $6,900 million, up 12% year over year. The segment benefited from an 8% rise in comparable store sales and new store growth. Average ticket and transaction moved upward by 6% and 2%, respectively.
Operating margin was 23.2% compared with 18.6% in the prior-year quarter. Strategic pricing, sales leverage as well as in-store operational efficiencies drove its margin.
International: Segmental net revenues of $1,979.9 million ascended 11% year over year. An improvement of 5% in comparable store sales, net company-operated new store growth of 12% and momentum in its licensed store revenues resulted in this uptick. This was marginally offset by an unfavorable impact of nearly 3% from foreign currency translation.
Operating margin expanded 300 basis points (bps) year over year to 15.2%. The upside was driven by sales leverage as well as lapping amortization expenses.
In the fiscal fourth quarter, comps in China rose 5% year over year. The metric fell 16% in the prior-year quarter. An 8% rise in transactions drove the upside. However, average tickets declined 3%.
Channel Development: Net revenues in the segment inched up 0.5% year over year to $486.1 million on the back of growth in its Global Coffee Alliance. Operating margin extended 520 bps year over year to 55.8%, given a rise in its North American Coffee Partnership joint venture income.
Financial Details
The company ended the fiscal fourth quarter with cash and cash equivalents of $3,551.5 million compared with $2,818.4 million as of Oct 2, 2022. As of Oct 1, long-term debt totaled $13,547.6 million compared with $13,119.9 million as of Oct 2, 2022.
Meanwhile, management declared a quarterly cash dividend of 57 cents per share. The dividend is payable on Nov 24 to shareholders of record as of Nov 10.
Other Updates
The Starbucks Rewards loyalty program’s 90-day active members in the United States increased to 32.6 million, reflecting a 14% year-over-year rise.
2024 Guidance
In fiscal 2024, it anticipates global comparable sales growth to be 5-7%. U.S. comparable sales growth is also expected in the range of 5-7%. An additional factor contributing positively to the company's fiscal 2024 comparable sales growth is its performance in China.
Comparable sales are projected to fall within the range of 4-6% from the second quarter through the fourth quarter, with a higher comparable figure in the first quarter as SBUX laps prior-year mobility restrictions.
Management forecasts global net store growth to be approximately 7%. Net store growth in the U.S. and China is expected to be approximately 4% and 13%, respectively. In the fiscal year 2024, Starbucks envisions that its consolidated revenue growth will continue to be between 10% and 12%, albeit leaning toward the lower end of this range.
The company suggests capital expenditures to be roughly $3 billion. GAAP and non-GAAP tax rates are projected in mid-20s. In fiscal 2024, both GAAP and non-GAAP EPS earnings per share are expected to improve in the range of 15% to 20%.
YUM! Brands, Inc. (YUM - Free Report) reported mixed third-quarter 2023 results, with earnings beating the Zacks Consensus Estimate but revenues missing the same.
YUM! Brands’ third-quarter 2023 adjusted EPS reached $1.44, increasing 32% from the prior year. Quarterly revenues of $1,708 million improved 4% year over year. YUM benefited from robust same-store sales and unit growth.
McDonald's Corporation (MCD - Free Report) reported third-quarter 2023 results, with earnings and revenues beating the Zacks Consensus Estimate. Both metrics surpassed the consensus estimate for the fifth straight quarter and increased on a year-over-year basis.
In the quarter under discussion, global comps of McDonald's expanded 8.8% compared with 11.7% in the prior-year quarter.
Yum China Holdings, Inc. (YUMC - Free Report) reported third-quarter 2023 results, with earnings and revenues missing the Zacks Consensus Estimate after beating in the preceding two quarters. Consumer demand weakened in late September through October, negatively impacting the company's quarterly results.
Total system sales of Yum China grew 15% year over year. System sales at KFC and Pizza Hut jumped 15% and 13% (excluding foreign currency translation), respectively.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Starbucks (SBUX) Q4 Earnings & Revenues Surpass Estimates
Starbucks Corporation (SBUX - Free Report) reported fourth-quarter fiscal 2023 results, with earnings and revenues beating the Zacks Consensus Estimate. The top and bottom lines increased year over year. Earnings surpassed the consensus estimate for the third straight quarter.
SBUX benefited from robust North America and International sales. Starbucks continues to witness favorable outcomes of its reinvention, evident in the enhanced experiences for both partners and customers. These results serve as compelling evidence that the company can consistently generate, expand and fortify its business while delivering value to all stakeholders.
As it steps into the current year amid macroeconomic uncertainties, Starbucks maintains confidence in the ongoing momentum across its global operations. Anticipating continued success, SBUX expects sustained positive momentum in the years ahead.
Discussion on Earnings, Revenues & Comps
The company reported adjusted earnings per share (EPS) of $1.06, surpassing the Zacks Consensus Estimate of 97 cents by 9.3%. The bottom line jumped 30.9% year over year from adjusted EPS of 81 cents reported in the prior-year quarter.
Quarterly revenues of $9,373.6 million beat the Zacks Consensus Estimate of $9,224 million by 1.6%. The top line rose 11.4% on a year-over-year basis, primarily driven by growth in comparable store sales and net new stores. Also, solid performances in licensed store businesses added to the positives. Global comparable store sales improved 8% year over year. This was backed by growth of 4% and 3% in average tickets and comparable transactions, respectively.
In the fiscal fourth quarter, Starbucks opened 816 net new stores worldwide, bringing the total store count to 38,038.
Starbucks Corporation Price, Consensus and EPS Surprise
Starbucks Corporation price-consensus-eps-surprise-chart | Starbucks Corporation Quote
Overall Margin Expands in Q4
On a non-GAAP basis, operating margin was 18.2%, up from 15.1% in the prior-year quarter. The positive outcome was mainly propelled by operational efficiencies within the stores, increased sales leverage and pricing strategies. However, growth was somewhat mitigated by prior investments committed to store partner wages, and elevated general and administrative costs associated with its reinvention Plan.
Segmental Details
Starbucks has three reportable operating segments — North America, International and Channel Development.
North America: Segmental net revenues were $6,900 million, up 12% year over year. The segment benefited from an 8% rise in comparable store sales and new store growth. Average ticket and transaction moved upward by 6% and 2%, respectively.
Operating margin was 23.2% compared with 18.6% in the prior-year quarter. Strategic pricing, sales leverage as well as in-store operational efficiencies drove its margin.
International: Segmental net revenues of $1,979.9 million ascended 11% year over year. An improvement of 5% in comparable store sales, net company-operated new store growth of 12% and momentum in its licensed store revenues resulted in this uptick. This was marginally offset by an unfavorable impact of nearly 3% from foreign currency translation.
Operating margin expanded 300 basis points (bps) year over year to 15.2%. The upside was driven by sales leverage as well as lapping amortization expenses.
In the fiscal fourth quarter, comps in China rose 5% year over year. The metric fell 16% in the prior-year quarter. An 8% rise in transactions drove the upside. However, average tickets declined 3%.
Channel Development: Net revenues in the segment inched up 0.5% year over year to $486.1 million on the back of growth in its Global Coffee Alliance.
Operating margin extended 520 bps year over year to 55.8%, given a rise in its North American Coffee Partnership joint venture income.
Financial Details
The company ended the fiscal fourth quarter with cash and cash equivalents of $3,551.5 million compared with $2,818.4 million as of Oct 2, 2022. As of Oct 1, long-term debt totaled $13,547.6 million compared with $13,119.9 million as of Oct 2, 2022.
Meanwhile, management declared a quarterly cash dividend of 57 cents per share. The dividend is payable on Nov 24 to shareholders of record as of Nov 10.
Other Updates
The Starbucks Rewards loyalty program’s 90-day active members in the United States increased to 32.6 million, reflecting a 14% year-over-year rise.
2024 Guidance
In fiscal 2024, it anticipates global comparable sales growth to be 5-7%. U.S. comparable sales growth is also expected in the range of 5-7%. An additional factor contributing positively to the company's fiscal 2024 comparable sales growth is its performance in China.
Comparable sales are projected to fall within the range of 4-6% from the second quarter through the fourth quarter, with a higher comparable figure in the first quarter as SBUX laps prior-year mobility restrictions.
Management forecasts global net store growth to be approximately 7%. Net store growth in the U.S. and China is expected to be approximately 4% and 13%, respectively. In the fiscal year 2024, Starbucks envisions that its consolidated revenue growth will continue to be between 10% and 12%, albeit leaning toward the lower end of this range.
The company suggests capital expenditures to be roughly $3 billion. GAAP and non-GAAP tax rates are projected in mid-20s. In fiscal 2024, both GAAP and non-GAAP EPS earnings per share are expected to improve in the range of 15% to 20%.
Zacks Rank
Starbucks carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Recent Retail-Wholesale Releases
YUM! Brands, Inc. (YUM - Free Report) reported mixed third-quarter 2023 results, with earnings beating the Zacks Consensus Estimate but revenues missing the same.
YUM! Brands’ third-quarter 2023 adjusted EPS reached $1.44, increasing 32% from the prior year. Quarterly revenues of $1,708 million improved 4% year over year. YUM benefited from robust same-store sales and unit growth.
McDonald's Corporation (MCD - Free Report) reported third-quarter 2023 results, with earnings and revenues beating the Zacks Consensus Estimate. Both metrics surpassed the consensus estimate for the fifth straight quarter and increased on a year-over-year basis.
In the quarter under discussion, global comps of McDonald's expanded 8.8% compared with 11.7% in the prior-year quarter.
Yum China Holdings, Inc. (YUMC - Free Report) reported third-quarter 2023 results, with earnings and revenues missing the Zacks Consensus Estimate after beating in the preceding two quarters. Consumer demand weakened in late September through October, negatively impacting the company's quarterly results.
Total system sales of Yum China grew 15% year over year. System sales at KFC and Pizza Hut jumped 15% and 13% (excluding foreign currency translation), respectively.