Retail coffee chain Starbucks (SBUX) has managed to beat Wall Street forecasts for its fourth-quarter 2024 financial results despite suffering a decline in its same-store sales.
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The Seattle-based company announced earnings per share (EPS) of $0.69, which topped the consensus expectation of $0.67. Revenue in the final three months of last year came in at $9.40 billion, which beat the $9.31 billion forecast on Wall Street. Sales were unchanged from a year ago.
The decent results come despite Starbucks reporting that its same-store sales declined for a fourth consecutive quarter. Management said that same-store sales fell 4%, fueled by a 6% decline in foot traffic at its coffee outlets. However, Wall Street was expecting a steeper drop of 5.5% in same-store sales during the quarter.
China Struggles
Within its home market of the U.S., same-store sales declined 4% as foot traffic to its cafes fell 8%. Outside of its home market, same-store sales at Starbucks’ international locations dropped 4%. In China, the company’s second-largest market, same-store sales slid 6%, fueled by a 4% dip in average ticket prices. The coffee giant has been relying on discounts in China to compete with domestic rivals.
“While we have room for improvement, we’re making progress as planned, and have confidence we’re on the right track,” said CEO Brian Niccol in a video statement posted to Starbucks’ website. Under Niccol, who took the helm of Starbucks last September, the company has undertaken an aggressive turnaround strategy that has involved everything from new executives to free coffee refills at its store locations.
SBUX stock is up 3% in after hours trading on news of the latest financial results. The company’s share price has gained 10% in the last 12 months.
Is SBUX Stock a Buy?
Starbucks’ stock has a consensus Moderate Buy rating among 22 Wall Street analysts. That rating is based on 13 Buy, six Hold, and three Sell recommendations issued in the last three months. The average SBUX price target of $106.40 implies 7.03% upside from current levels. These analyst ratings are likely to change following today’s results.
