Kevin Johnson, CEO, Starbucks
Scott Mlyn | CNBC
Starbucks reported rising cold beverage sales in the United States on Tuesday, which fueled a blow to profits and sales for the company.
But the company also warned of a slower recovery in China, its second largest market. It lowered its full-year forecast for the country’s top-line growth in the same business, despite raising its overall outlook for fiscal 2021 earnings per share.
The stock fell 3.4% in extended trading after hitting a 52-week high before the market closed.
Here’s what the company said, relative to Wall Street expectations, based on an analyst survey by Refinitiv:
- Earnings per share: USD 1.01 adjusted vs. 78 cents expected
- Revenue: Expected $ 7.5 billion versus $ 7.29 billion
The coffee giant reported net income of $ 1.15 billion, or 97 cents per share, for the third quarter, compared to a net loss of $ 678.4 million, or 58 cents per share, last year.
Excluding restructuring charges and other items, Starbucks earned $ 1.01 per share, beating the 78 cents per share expected by analysts surveyed by Refinitiv.
Net sales rose 78% to $ 7.5 billion, beating expectations of $ 7.29 billion. Worldwide sales in the same store increased by 73%. A year ago, the company’s global sales in the same store plummeted 40% in the quarter as the global pandemic led to lockdowns in some regions.
In the United States, Starbucks’ largest market, sales in the same store increased 83%. On a 2 year basis, sales in the same store in the market increased 10%. Almost three quarters of the company’s beverage sales came from cold beverages such as Nitro Cold Brew. More than half of all sales were from members of the loyalty program.
Outside the US, Starbucks sales in the same store increased 41%, driven by customer traffic growth of 55%. Executives said the virus resurgence in Japan that led to the declaration of a state of emergency affected traffic there during the quarter. China saw sales growth in the same business of 19%. A year ago, the country’s sales in the same store were down 19%.
“The health of our business in China is strong and we have never been more confident about long-term growth opportunities,” CEO Kevin Johnson told analysts.
For fiscal 2021, the company has raised its earnings per share to a range of $ 2.97 to $ 3.02 from its previous range of $ 2.65 to $ 2.75. On an adjusted basis, the company expects earnings per share of $ 3.20 to $ 3.25, up from the previous range of $ 2.90 to $ 3. The fiscal year this year includes a 53rd week that is expected to add 10 cents to the company’s earnings per share.
Starbucks has also narrowed its outlook for global revenue growth in the same business for the full year. It is now expected that this metric will increase by 20-21% compared to a previous range of 18-23%.
The company also forecast a slowdown in sales in the same store in China, where it had previously forecast 27% to 32% growth. Now, however, it is forecasting sales growth in the same store of 18% to 20%. For the next quarter, flat sales in the same business are expected for the country.
In the US, Starbucks now expects sales growth of 21-22% for cafes that are open for at least 13 months, at the high end of its previous range of 17-22%.
Read the full results report here.
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