Starbucks reports ‘outstanding’ Q2; U.S., global markets top expectations
Starbucks posted second-quarter earnings and sales that topped estimates, boosted by a 12% increase in U.S. same-store sales and an uptick in growth in China.
The report was Laxman Narasimhan's first earnings report since he took the reins of Starbucks from Howard Shultz in March, following a lengthy “immersion experience” in the company.
“From my immersion observations, our leadership team now has a clear line of sight into our growth headroom, as well as our opportunities to enhance margins and modernize the business, brand, partner experience and culture of Starbucks,” he stated.
The coffee giant reported net income of $908.3 million, or $0.79 per share, for the quarter ended April 2, up from $674.5 million, or $0.58 per share, in the year-ago quarter.
Excluding items, Starbucks earned $0.74 per share, beating Street estimates of $0.64 per share.
Net sales rose 14.2% to $8.72 billion, topping analysts’ estimates of $8.4 billion. Global comparable store sales rose 11% in the quarter. U.S. comparable-store sales rose 12%, driven by a 6% increase in comparable transactions and a 6% increase in average ticket.
In China, the company’s largest market outside of the U.S. same-store sales rose 3% as customers returned to Starbucks stores amid the end of the country’s zero Covid policy. It was the first increase since the company’s third quarter in 2021.
Both the U.S. and international markets outperformed expectations.
Active members of its U.S. loyalty program increased 15% from the year-ago period to 30.8 million.
Starbucks continued its expansion during the quarter, opening more than 100 net new stores in North America. International added more than 360 net new stores. In September, the company said it would add 2,000 net new stores in the U.S. by 2025, diversifying its brick-and-mortar portfolio across cafes, pick-up stores, drive thru-only, and delivery-only locations to meet “customers whenever and wherever they want.”
“I am so proud of our outstanding second quarter performance, underscoring strength in both topline and margin globally,” said CFO Rachel Ruggeri. “This momentum was made possible by the investments we are making in our stores and partners, and allowed us to continue unlocking capital to further reinvest in our business.”
Starbucks reaffirmed its fiscal 2023 outlook, with expected revenue growth of 10% to 12% and adjusted earnings per share growth on the low end of 15% to 20%.
Starbucks ended the quarter with 36,634 stores globally, with 51% company-operated and 49% licensed. Stores in the U.S. and China comprised 61% of the company’s global portfolio, with 16,044 and 6,243 stores in the U.S. and China, respectively.