Starbucks earnings beat, China sees better-than-expected sales growth
Starbucks (SBUX) reported fiscal second quarter 2023 earnings results that beat estimates on Tuesday, May 2 after market close.
In its fiscal second quarter, Starbucks posted U.S. same-store sales that beat estimates, up 12%. Meanwhile, it posted a major beat on same-store sale estimates in China, up 3% compared to Wall Street estimates that expected a loss of 9.86% as the country continues to recover from the impact of the COVID-19 pandemic.
This is Laxman Narasimhan's first earnings report since he took the helm from Howard Schultz on March 23, following a nearly six month immersion experience at the company. In the release, Narasimhan said, "From my immersion observations, our leadership team now has a clear line of sight into our growth headroom, as well as our opportunities to enhance margins and modernize the business, brand, partner experience and culture of Starbucks."
Here's what Starbucks reported compared to Wall Street estimates, per Bloomberg:
Revenue: $8.7 billion versus $8.42 billion expected
Adjusted earnings per share: $0.79 versus $0.65 expected
Same-Store Sales: 11% versus up 7.33% expected
U.S. Same-Store Sales: 12% versus up 8.91% expected
International Same-Store Sales: 7% versus up 1.51% expected
China Same-Store Sales: 3% versus down 9.86% expected
In the U.S., same-store sales increased 12%, largely driven by a 6% uptick in transactions year-over-year and a 6% increase in average ticket size.
Starbucks' loyalty app gained momentum yet again, even after the company implemented changes that went into effect February 13. The number of total active members increased by 15% last quarter to 30.8 million. Year-over-year, total members are up by 4 million.
International growth
International growth was a key driver this quarter. In this segment, sales increased by 7%, boosted by a 7% increase in transactions. In China specifically, the company saw a rebound from last quarter when it saw same-store sales drop 29%. This quarter, sales increased 3%, driven by a 4% increase in transactions, though customers there seem to be adding less to their orders, with a 1% decline in the average ticket.
In the fiscal second quarter, Starbucks opened 464 net new stores. That included closures in both North America and international “as part of ongoing efforts to strengthen the portfolio” the company said in the release. Total locations to end the period: 36,634 stores globally with 51% company-operated and 49% licensed. Year-over-year store count increased by 3% in North America, but 8% internationally.
In September, Starbucks announced its 6,000th store opening in China.
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Brooke DiPalma is a reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.
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