Starbucks first quarter revenue topped Wall Street estimates, but same-store sales hit by COVID resurgence

Starbucks (SBUX) on Tuesday reported mixed fiscal results for the first quarter, with the coffee giant posting above-forecast profits even as the COVID-19 crisis sapped some of its momentum from 2020.

Here’s what the Seattle-based company reported, compared to Wall Street expectations, according to a consensus estimate from Bloomberg:

• Returned: 6.7 billion dollars against 6.92 billion dollars expected

• Adj. earnings per share (EPS): 61 cents vs. 55 cents per share expected

• Comparable sales in the United States: -5.0% vs. -4.16% expected

• Comparable international sales: -3% vs. -1.70% expected

In the earnings release, CEO Kevin Johnson said Starbucks continued to show “significant and sequential improvements” in its earnings results, despite its business disruption by the coronavirus pandemic.

“Investments in our partners, beverage innovation and digital customer relationships have continued to fuel our recovery and position Starbucks for long-term, sustainable growth,” said Johnson.

“We remain optimistic about our strong operating outlook for fiscal 2021 as well as our ability to unleash the full potential of Starbucks to create value for our stakeholders,” added the CEO.

For the fiscal first quarter, consolidated net income fell 5% from a year ago to $ 6.7 billion, underlining how the return to lockdowns and a tough job market has negative consequences on consumer spending. The company highlighted the impact of COVID-19 “on reducing customer traffic, changing operations, reducing store hours and temporary store closures.”

In the quarter, closely tracked global same store sales fell 5%, as comparable transactions fell 19%, but average ticket sizes jumped 17%.

In the United States, same-store sales fell 5%, as comparable transactions declined 21%, but average ticket sizes jumped 19%. In China – the source country of the pandemic but also the first to recover – same-store sales rose 5%, thanks to a 9% increase in average ticket size.

The story continues

Starbucks also shared its updated fiscal forecast for the second quarter. The company expects comparable store sales in the United States to be between 5-10%, while comparable store sales in China are expected to grow by 100%. The company also sees adjusted earnings per share of between 45 and 50 cents.

Starbucks also announced that chief operating officer and group chairman Roz Brewer has accepted the role of CEO of another publicly traded company and will be leaving Starbucks at the end of February. Brewer’s new position will be announced in the near future, the company added. Earlier this month, Starbucks announced that its CFO, Patrick Grismer, will retire on February 1, naming Rachel Ruggeri as its successor.

Elsewhere in the release, 90-day active Starbucks Rewards members jumped 15% from a year ago to 21.8 million users in the United States.

Starbucks opened 278 net new stores, ending the quarter with 32,938 stores worldwide. The company noted that 61% of its global store footprint is located in the United States and China, with 15,340 and 4,863 stores, respectively.

Although many of its major customers are working from home as the coronavirus pandemic restricts public life, Starbucks has nonetheless made an impressive recovery.

Analysts cite the company’s resilience in large international markets like China and its willingness to adapt its vast network of cushy stores to the realities of social distancing – in part by going digital and pushing loyalty rewards.

In a research note last week, Morningstar noted that Starbucks was “well positioned to succeed” because of these factors. “We remain convinced that it will achieve its annual growth of 10% in EPS [target]», Wrote the cabinet.

Peter Saleh, analyst at BTIG, said last month that “while we expect Starbucks to make a full recovery once the vaccine becomes widely available, we don’t see a catalyst for same-store sales for the next two years. month”.

However, “we believe investors are looking beyond this recent weakening to accelerate growth in the second half of fiscal 2021,” Saleh said, adding that same-store sales in China are expected to increase 4% to 5%. % in the first fiscal quarter. .

In a note to clients last week, RBC Capital Markets analyst Christopher Carril suggested that Starbucks’ earnings could make some noise, given the challenge of the comparable quarter from a year ago when the virus emerged. for the first time. Still, the bank has an “Outperformance” rating on Starbucks shares.

Like many other retail and food / beverage establishments, Starbucks suffered from a lack of foot traffic during COVID-19. Yet, according to the Data Intelligence platform Placer.ai, the coffee giant’s visits have started to move “significantly in the right direction,” even with fewer commuters entering its stores.

Shares of Starbucks, which hit new record highs in December, fell more than 1% in after-market trades, after closing higher at $ 104.69.

Brooke DiPalma is a producer and reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma.

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