Starbucks, the world-renowned coffee giant, has once again proven its dominance in the coffee industry, reporting a significant rise in quarterly earnings and revenue that surpassed analysts’ expectations. The surge in profits was fueled by strong demand for pricier drinks among U.S. customers, with shares of the company soaring 10% in morning trading.
In its fiscal fourth quarter, Starbucks reported earnings per share of $1.06, beating the expected 97 cents and revenue of $9.37 billion, higher than the anticipated $9.29 billion. The company’s net income attributable to Starbucks for the quarter ended October 1 was $1.22 billion, or $1.06 per share, up from $878.3 million, or 76 cents per share, from the previous year. This impressive performance was driven by an 11.4% increase in net sales, totalling $9.37 billion.
CEO Laxman Narasimhan expressed his satisfaction with the company’s performance, stating, “We had a remarkable fall launch that led to record-breaking average weekly sales.” This was likely a reference to the company’s popular fall menu, which includes fan favourites like the pumpkin cream cold brew and the iconic pumpkin spice latte. These seasonal offerings typically result in a significant boost in customer traffic to Starbucks locations.
Regarding same-store sales growth, the company reported an 8% increase, with higher average checks and a 3% increase in customer traffic to its cafes. This exceeded the expected growth of 6.8% predicted by analysts surveyed by StreetAccount. The company’s U.S. and North American same-store sales also grew by 8%, with the average check in its home market rising by 6% and traffic increasing by 2%.
Outside of North America, same-store sales experienced a 5% increase, driven entirely by more customer visits. In China, Starbucks’ second-largest market, same-store sales rose by 5%, with customer traffic increasing by 8%, although the average ticket fell by 3%. Despite the challenges faced in the Chinese market, Narasimhan expressed optimism about the company’s performance, stating, “We feel good about the overall returns that we’re getting there, and I’m heartened by how the business is coming together, despite all the headwinds that have been there for the last couple of years.”
As Starbucks looks to the future, the company is projecting continued growth and success, with an anticipated increase in global footprint by 7% in fiscal 2024. The U.S. market is expected to grow by 4%, while China’s market is projected to climb by 13%. With a solid strategy and a strong performance in the recent quarter, Starbucks is well-positioned to continue thriving in the competitive coffee industry.