Starbucks

  • Java   giant, Starbucks, reported fourth quarter results which showed how labour   challenges, rising costs, and the lingering impact of the pandemic continued   to affect the business.

  • The company reported a jump in sales of 31% to $8.1 billion, which was   below Wall Street estimates. This was due to low base effects from   disruptions in the prior year quarter, as well as an extra week in the most   recent quarter. Global same-store sales climbed 17% year-over-year, with a 2%   pickup in average order sizes. US same-store sales increased by 22% and   Chinese same-store sales shrank by 7%. China, the company’s second-largest   market, was hit by renewed lockdown rules after a resurgence of Covid-19. At   its peak in mid-August, approximately 80% of stores in China were impacted by   the pandemic.

  • The non-GAAP operating margin of 19.6% increased from 13.2% in the   prior year primarily driven by sales leverage from a recovery as well as the   lapping of Covid-19 and restructuring-related costs incurred in the prior   year. Higher pricing in North America provided a boost but was partially   offset by increased supply chain costs.

  • Starbucks reported fiscal fourth-quarter net income of $1.76   billion, or non-GAAP earnings per share of $1.00. This is up from $0.51 in   the prior year and includes $0.10 in earnings related to the extra week in Q4   fiscal 2021.

  • The coffee king opened 538 net new stores in Q4 2021 - ending the   period with a record 33,833 stores globally. 51% and 49% stores are   company-operated and licensed, respectively. Starbucks closed some old-format   stores in the period and opened new ones designed for mobile and to-go orders.   The company plans to add approximately 2,000 net new cafes to its global   geographic footprint, with roughly three-quarters of those new locations   expected to be built outside of the US.

  • The Starbucks Rewards loyalty program 90-day active members in the   US increased 28% year-over-year to 24.8 million. During the quarter, 51% of   customers were Starbucks Rewards members.

  • Looking   ahead, Starbucks expects a bumper holiday season quarter with record-breaking   sales. And for fiscal full-year 2022, the coffee chain is forecasting   adjusted earnings per share to rise by at least 10%. The share appears   relatively expensive trading on 31x historic earnings. Even though Starbucks   is bouncing back from the pandemic, the question on investors’ minds is   whether they are doing so fast enough. We are not holders of the stock.

Starbucks