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International Segment Key to Starbucks (SBUX) Q1 Earnings

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Starbucks Corporation SBUX, which is scheduled to report first-quarter fiscal 2020 results on Jan 28, will be under severe investor scrutiny. Investors will not just look at Starbucks’ top and bottom-line performance but will also closely observe its key segments to ascertain whether the strategic initiatives taken by the company are yielding results or not. With that in mind, let’s delve deeper and analyze the factors impacting the international segment.

Strategic Efforts to Drive International Segment

The international segment witnessed growth of 6% in the prior-year quarter, a trend that most likely continued in the first-quarter fiscal 2020 because of China Asis Pacific.

Improving customer experience via innovative new store designs, up-leveling product offerings and margin expansion through process and supply chain efficiencies have been driving China Asia Pacific performance. Management believes that China and the Asia-Pacific region will drive business growth backed by rapid unit growth, growing brand awareness, and increased usage of the digital/mobile/loyalty platforms.

Furthermore, the company’s partnership with Alibaba continues to drive growth. Starbucks began delivery services in Beijing and Shanghai via Alibaba's platform. The company announced that it has surpassed the goal of increasing Starbucks Delivers footprint to 3,000 stores in 100 cities by the end of the fiscal 2019. The business in China is rapidly growing due to innovative store designs, local product innovations and the success of MSR program.

Beyond China, the company is facilitating growth in countries like Japan, Korea, Thailand and Indonesia. However, growth of European region has remained a concern. (Read more: Factors Setting the Tone for Starbucks Q1 Earnings)

Overall Q1 Expectations

The Zacks Consensus Estimate for first-quarter earnings is pegged at 75 cents, flat with the prior-year period. Over the past 30 days, the company’s earnings estimates have been stable. For quarterly revenues, the consensus mark is pegged at $7,089 million, suggesting growth of 6.8% from the prior-year quarter.

Starbucks has a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Starbucks Corporation Price and EPS Surprise


Stocks to Watch for Earnings

McDonald's Corporation MCD and Brinker International, Inc. EAT both are slated to report quarterly numbers on Jan 29.

Yum China Holdings, Inc. (YUMC - Free Report) is expected to report quarterly numbers on Feb 5.

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