Starbucks' (SBUX) Q1 Earnings Beat, Revenues Miss Estimates
Zacks Investment Research | Jan 28, 2020 08:50PM ET
Starbucks Corporation (NASDAQ:SBUX) reported mixed first-quarter fiscal 2020 results, wherein the bottom line surpassed the Zacks Consensus Estimate but the top line missed the same. Notably, revenues missed the consensus mark after beating in the trailing two quarters. Following the results, the company’s shares declined 1.8% in after-hour trading session on Jan 28.
However, the company’s both top and bottom line increased year over year. The quarterly results benefited from robust performance of Americas and international segments, store openings, enhanced customer experience, and digitalization. Meanwhile, comparable sales from China increased for the sixth straight quarter.
Discussion on Earnings, Revenues & Comps
In the quarter under review, adjusted earnings of 79 cents per share surpassed the consensus mark of 76 cents and improved 5.3% on a year-over-year basis.
Total revenues came in at $7,097.1 million, marginally missing the Zacks Consensus Estimate of $7,100 million. However, the figure improved 7% from the year-ago level. The upside can be attributed to robust global retail sales, comparable sales growth and streamline-driven activities.
Global comparable store sales increased 5% compared with 5% improvement in fourth-quarter fiscal 2019. Global comps were driven by a 3% increase in average ticket and 2% improvement in comparable transactions.
Starbucks opened 539 net new stores worldwide in the fiscal first quarter, bringing the total store count to 31,795. Global store growth came in at 6%, based on a year-over-year comparison.
Overall Margin Improves in Q1
On a non-GAAP basis, operating margin expanded 80 basis points year over year to 18.2%. The uptrend was primarily due to sales leverage and supply chain efficiencies. The increase was partially overshadowed by rise in wages and benefits. It was also negated to a lesser degree by rent inflation and investments in store labor hours. Per management, despite investing in partners, stores and digital capabilities, it has managed to deliver margin expansion.
Starbucks Corporation Price, Consensus and EPS Surprise
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