Starbucks Corp. reported better-than-expected fourth-quarter earnings results and same-store sales as customers start to return to its cafes faster than expected. But the pandemic still took a big bite out of sales.
The coffee giant said it lost $1.2 billion in sales during the fourth quarter amid modified operations, reduced hours, reduced customer traffic and other factors related to the pandemic.
Starbucks reported net income of $392.6 million, or $0.33 per share, for the quarter ended Sept. 27, down from $802.9 million, or $0.67 per share, a year earlier. Excluding items, earnings were $0.51 per share, beating the $0.31 s per share by analysts
Net sales dropped 8% to $6.2 billion, topping expectations of $6.06 billion. Global same-store sales fell 9%. While customers are spending more on their coffee orders, Starbucks saw the number of transactions fall.
In the United States, same-store sales fell 9%; comparable transactions declined 25% but the average ticket size increased by 21%. Active membership in Starbucks’ U.S. loyalty program rose 10% to 19.3 million and drove 47% of transactions.
Same-store sales fell 3% in China, which is Starbucks’ second-largest market.
“I am very pleased with our strong finish to fiscal 2020, underpinned by a faster-than-expected recovery in our two lead growth markets, the U.S. and China,” said Starbucks president and CEO Kevin Johnson. “These results demonstrate the continued strength and relevance of our brand, the effectiveness of the actions we’ve taken to adapt to meaningful changes in consumer behavior and the extraordinary efforts of our green apron partners to serve our customers and communities in challenging circumstances.”
Starbucks opened 480 net new cafes during the quarter, for a total of 32,660 stores globally, of which 51% and 49% were company-operated and licensed, respectively. In the next fiscal year, it plans to open 1,100 net new stores globally, including 600 in China. The company expects $1.9 billion in capital expenditures.
Looking ahead, Johnson expressed optimism that Starbucks will “emerge from the pandemic as a stronger and more resilient company.”
“The guiding principles we established at the onset of the pandemic, combined with our industry-leading digital platform and our ability to innovate rapidly, continue to fuel our recovery and provide confidence in a robust operating outlook for fiscal 2021,” he said.
In fiscal 2021, Starbucks expects revenue of $28 billion to $29 billion, with adjusted earnings of 50 cents to 55 cents for the fiscal first quarter and a range of $2.70 to $2.90 for the full year.
Global same-store sales are expected to grow 18% to 23% for the year, with U.S. same-store sales forecast to increase 17% to 22%. China’s same-store sales growth is expected to reach 27% to 32%.