Starbucks
YTD, Starbucks shares are down 17% and are off by 25% from it's all-time high in July of last year. Notably, there has been little slowdown in terms of earnings growth for Starbucks as analysts are forecasting 30%+ earnings growth over the next 12 months. It could also benefit from increased slack in the labor market and lower commodity prices which could lead to more margin expansion.
Inside the Numbers
In Q3, Starbucks reported $0.81 per share in earnings which was better than expectations of $0.72 per share. Overall, net income was down about 45% for the quarter due to increased spending to renovate stores.
Revenue was up 3% and also beat expectations at $8.4 billion vs $8.3 billion. The company's loyalty program also saw its active membership swell by 16% to reach 28.7 million people.
Same-store sales were up 7% globally, slightly higher than forecasts of 6%. In the U.S., same-store sales were 11% higher due to a combination of higher ticket prices and volumes. Overall, prices were up 6% compared to last year, but management sounded confident that there wouldn't be any more price hikes in the near future.
The company continues to benefit from the popularity of its Pumpkin Spice drinks and a continuing, increasing share of iced coffee drinks which come with much higher margins. Another positive note is that in-store volumes have bounced back to 2019 levels, while drive-throughs and online orders are significantly higher.
For its next fiscal year, the company sees revenue growth between 10% and 12% even accounting for a strong dollar. It sees global same-store sales growth between 7% and 9%, although there could be some drag depending on the situation in China. It also sees EPS growth of 15% due to higher-than-expected costs as it remodels stores to lower service times.
