Retail coffee chain Starbucks (SBUX) has reported mixed financial results as its same-store sales declined for a sixth consecutive quarter.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
The Seattle-based company announced earnings per share (EPS) of $0.50, which fell short of the $0.65 that was expected on Wall Street. Revenue in what was its Fiscal third quarter totaled $9.50 billion, which was ahead of the $9.31 billion consensus expectation of analysts. Sales were up 4% from a year earlier.
However, Starbucks’ global same-store sales declined 2%, a worse drop than estimates of a 1.3% decline. That said, Starbucks’ North American stores performed better than expected, with same-store sales falling 2%, a smaller decrease than the 2.5% anticipated on Wall Street. Transactions fell 3%, but average ticket price rose 1% during the quarter.
Starbucks’ earnings per share. Source: Main Street Data
China Growth
In China, Starbucks’ second-largest market, the company reported same-store sales growth of 2% for the quarter. Transactions climbed 6%. Starbucks has cut prices for its drinks in China to compete with low-cost domestic rivals such as Luckin Coffee (LKNCY).
This quarter marked the first time in more than a year that Starbucks’ China business saw its same-store sales increase. Under pressure from increased competition, a weaker economy, and the distraction of the struggling U.S. business, Starbucks has been weighing selling a stake in its China business, which could be valued at up to $10 billion.
Looking ahead, Starbucks plans to launch improved artisanal food, coconut-water-based drinks, a new Starbucks app, and a refreshed rewards program, said management. SBUX stock has risen 3% this year.
Is SBUX Stock a Buy?
The stock of Starbucks has a consensus Moderate Buy rating among 24 Wall Street analysts. That rating is based on 13 Buy, nine Hold, and two Sell recommendations issued in the last three months. The average SBUX price target of $96.24 implies 2.74% upside from current levels. These ratings are likely to change after the company’s financial results.
