Starbucks Q1 Earnings & Revenues Surpass Estimates

Starbucks Corporation (SBUX - Free Report) reported impressive first-quarter fiscal 2019 results, wherein both top and bottom line surpassed the respective Zacks Consensus Estimate for the third straight quarter. Results benefited from a robust performance by the Americas and China-Asia-Pacific segment and store openings. Ownership change in the East China business and robust performance during the holiday season too aided the company’s quarterly performance. Meanwhile, comparable sales from China increased for the second straight quarter.

Wall Street applauded the company’s remarkable results, with shares gaining 2% in after-hours trading on Jan 24. In the past six months, Starbucks has rallied 29.9%, outperforming the industry’s 15.3% growth.

Earnings, Revenues & Comps Discussion

Adjusted earnings of 75 cents per share surpassed the Zacks Consensus Estimate of 65 cents and grew 15.4% on a year-over-year basis.

Total revenues came in at $6.6 billion, which outpaced the consensus estimate of $6.5 billion and increased 9% from the year-ago level. The upside was driven by robust new store performance, comparable sales growth, consolidation of the company’s East China business and streamline-driven activities.

Global comparable store sales increased 4% compared with 3% registered in the fourth quarter of fiscal 2018. Global comps were driven by a 3% increase in average ticket. However, transactions remained flat compared with a 1% decline in the preceding quarter.

In the quarter under review, Starbucks opened 541 net new stores worldwide, bringing the total store count to 29,865 across 78 markets. The company said that more than two-thirds of the net new stores were opened internationally. It plans to build 600 net new stores annually in Mainland China, which will double the market's store count to 6,000 across 230 cities by 2023 from the figure at fiscal 2017 end. In first-quarter fiscal 2019, the company opened 259 stores in China.

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