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Will Starbucks' (SBUX) Q3 Earnings Pull It Out of Its Growth Slump?
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Starbucks (SBUX - Free Report) is expected to report its next quarterly earnings after the market close on July 26. Shares of SBUX gained less than 1% just one day ahead of its upcoming earnings release. Investors are eager to see what the report will tell in terms of comp and global sales as well as growth expectations.
Starbucks reported fairly okay results last quarter, posting $0.53 in earnings per share, which fell in line with our Zacks Consensus Estimate. SBUX also saw a 14% increase in revenue, reaching a record of $6 billion. The company saw an increase in global comp store sales, particularly a 4% increase in China compared to only a 2% increase in U.S. stores.
However, over the past few months, market expectations have been low for the company, as its stock performance has been down by almost 12% since May. SBUX management also warned that comps in its Chinese stores were decreasing. This comes as a setback as China is said to be one of their biggest markets. Not only should investors look towards comp sales numbers, but also its progress in China and its initiatives to increase sales in the U.S. Let’s take a closer look at what investors will be expecting from tomorrow’s report.
Latest Outlook
According to our latest Zacks Consensus Estimates, analysts expect SBUX to report earnings of $0.60 per share on $6.26 billion in revenue. These results would mark year-over-year growth of 9.09% and 10.57%, respectively.
SBUX Progress in China
In Starbucks' last quarterly report, comp sales for the Chinese market were the highest. Management expects China to become the largest market in the long term, with plans to open 500 new stores each year. However, it is expected in the upcoming earnings report that comp sales for China could decrease. If this were to be the case, then this could pose as a problem for the company’s growth strategy in the country.
Initiatives to Increase U.S. Sales
Starbucks digital flywheel program, which includes its rewards programs, mobile payments and delivery, accounted for 1.6 million active users, as reported in the previous quarterly report. This also led to a 39% increase in member spend of U.S company operated sales.
Along with that, management is starting to prioritize the development of food offerings at Starbucks. Despite the fluctuation in this certain area, 21% of Starbucks' revenue was from U.S. food sales. Therefore, investors can keep a close eye on the number of sales that food and beverage have produced this quarter in order to analyze how the company has performed in that area.
Around the U.S., Starbucks is starting to develop its Roasteries, which could be an enticing factor for customers and potentially raise sales in the upcoming years. Around 1,000 reserve stores are set to be open, with around 20% of them being in global locations.
Bottom Line
Other than financials, investors should want to focus heavily on Starbucks growth and sales strategy in the upcoming report. Watching out for what management has to say, along with the numbers, will help investors understand the future of Starbucks nationally as well as globally.
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Will Starbucks' (SBUX) Q3 Earnings Pull It Out of Its Growth Slump?
Starbucks (SBUX - Free Report) is expected to report its next quarterly earnings after the market close on July 26. Shares of SBUX gained less than 1% just one day ahead of its upcoming earnings release. Investors are eager to see what the report will tell in terms of comp and global sales as well as growth expectations.
Starbucks reported fairly okay results last quarter, posting $0.53 in earnings per share, which fell in line with our Zacks Consensus Estimate. SBUX also saw a 14% increase in revenue, reaching a record of $6 billion. The company saw an increase in global comp store sales, particularly a 4% increase in China compared to only a 2% increase in U.S. stores.
However, over the past few months, market expectations have been low for the company, as its stock performance has been down by almost 12% since May. SBUX management also warned that comps in its Chinese stores were decreasing. This comes as a setback as China is said to be one of their biggest markets. Not only should investors look towards comp sales numbers, but also its progress in China and its initiatives to increase sales in the U.S. Let’s take a closer look at what investors will be expecting from tomorrow’s report.
Latest Outlook
According to our latest Zacks Consensus Estimates, analysts expect SBUX to report earnings of $0.60 per share on $6.26 billion in revenue. These results would mark year-over-year growth of 9.09% and 10.57%, respectively.
SBUX Progress in China
In Starbucks' last quarterly report, comp sales for the Chinese market were the highest. Management expects China to become the largest market in the long term, with plans to open 500 new stores each year. However, it is expected in the upcoming earnings report that comp sales for China could decrease. If this were to be the case, then this could pose as a problem for the company’s growth strategy in the country.
Initiatives to Increase U.S. Sales
Starbucks digital flywheel program, which includes its rewards programs, mobile payments and delivery, accounted for 1.6 million active users, as reported in the previous quarterly report. This also led to a 39% increase in member spend of U.S company operated sales.
Along with that, management is starting to prioritize the development of food offerings at Starbucks. Despite the fluctuation in this certain area, 21% of Starbucks' revenue was from U.S. food sales. Therefore, investors can keep a close eye on the number of sales that food and beverage have produced this quarter in order to analyze how the company has performed in that area.
Around the U.S., Starbucks is starting to develop its Roasteries, which could be an enticing factor for customers and potentially raise sales in the upcoming years. Around 1,000 reserve stores are set to be open, with around 20% of them being in global locations.
Bottom Line
Other than financials, investors should want to focus heavily on Starbucks growth and sales strategy in the upcoming report. Watching out for what management has to say, along with the numbers, will help investors understand the future of Starbucks nationally as well as globally.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market. Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020. Click here for the 6 trades >>