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Starbucks Corporation (NASDAQ:SBUX) clung to its post-earnings surge even after the FQ1 earnings conference call.
The Seattle-based company projected full-year revenue growth in the range of +7% to +10%, adjusting prior expectations for the low end of a +10% to +12% range. Full-year global and U.S. comparable sales growth are anticipated to increase by 4% to 6%, compared to a prior estimate of +5% to +7%. The company maintained its prior EPS growth and global store growth guidance, keeping the consensus estimate for full-year EPS of $4.10 in play.
During the call, SBUX management highlighted the upside from new products, holiday promotions, and the re-invention plan, countering some traffic headwinds during the quarter such as the Middle East conflict and the weaker economic backdrop in China. Starbucks (SBUX) noted an increase in store visits from its most loyal customers during the key holiday quarter and targeted promotions towards casual customers. The company’s focus is on increasing traffic in the afternoon daypart. In China, Starbucks plans to become the leading brand in the premium category, noting that brand familiarity in China is still on the rise. Additionally, Starbucks is planning to open two new roasteries to supplement the existing locations in Seattle (opened 2014), Shanghai (2017), Milan (2018), New York City (2018), Tokyo (2019), and Chicago (2019). On the labor front, Starbucks stated that there is no playbook for union-busting.
For FQ1, Starbucks reported that comparable sales in North America increased by 5%, driven by a 4% increase in average ticket and a 1% rise in comparable transactions. International comparable sales rose by 7% during the quarter. China comparable store sales increased by 10%. The company’s consolidated non-GAAP operating margin rose by 130 basis points from a year ago to 15.8% of sales, falling just short of the consensus expectation of 15.9%.
Shares of Starbucks were up 2.55% in postmarket trading on Thursday.
