Coffee giant Starbucks Corporation (NASDAQ: SBUX) exceeded Wall Street’s expectations in its recent quarterly report, leading to a surge in its shares. The company’s same-store sales soared by 8%, propelled by larger average checks and a 3% boost in customer visits to its cafes.
Starbucks reported earnings per share of $1.06, surpassing the estimated 97 cents, and revenue of $9.37 billion, beating the expected $9.29 billion. The net income for the quarter ending October 1 stood at $1.22 billion, or $1.06 per share, compared to $878.3 million, or 76 cents per share, the previous year. Net sales climbed by 11.4% to $9.37 billion.
The company’s strong showing can be credited to its fall menu, including popular offerings like the pumpkin cream cold brew and the iconic pumpkin spice latte, launched in late August. These drinks, enjoyed by a devoted fanbase, played a pivotal role in boosting sales and attracting customers to Starbucks outlets.
CEO Laxman Narasimhan put down the success to a “remarkable fall launch,” resulting in record-breaking average weekly sales. U.S. and North American same-store sales grew by 8%, with a 6% rise in average checks and a 2% increase in traffic. Internationally, same-store sales increased by 5%, driven primarily by higher customer visits.
In China, Starbucks’ second-largest market, same-store sales increased by 5%. While customer visits grew by 8%, the average ticket size decreased by 3%. Despite challenges faced due to the Chinese government’s past zero Covid policy, Starbucks experienced a positive trajectory in the region.
Looking ahead to fiscal 2024, Starbucks anticipates a same-store sales growth of 5% to 7%, a slight dip from its previous long-term forecast of 7% to 9%. CFO Rachel Ruggeri emphasised that this outlook reflects a “healthy and achievable” comparison.
Starbucks also shared plans for global expansion, targeting a 7% increase in its footprint for the upcoming fiscal year. The U.S. market is expected to grow by 4%, while China’s footprint is set to expand by an impressive 13%. The company maintains its earnings per share growth forecast of 15% to 20%.
Investors responded positively to Starbucks’ robust performance, with company shares surging by 10% at the New York Stock Exchange’s opening.
