Starbucks Q1: Results miss estimates!

Starbucks Q1

Revenue - The revenue reported by Starbucks for the first quarter was $8.05 billion as compared to $6.75 billion in the year-ago period. Sequentially, the revenue declined from $8.15 billion. However, the revenue is higher than a street estimate of $7.98 billion.

International market -  Starbucks saw weaker demand for its coffee in the international market (outside the US). International store sales fell 3%, dragged down by China’s sluggish performance. China, the second-largest market for the company, saw sales shrank by 14% in the quarter.

Profits - The company reported an earning of $815.9 million or 69 cents a share, up from $622.2 million, or 53 cents per share, a year earlier. Earning Per Share (excluding items) is lower than the street estimate of 80 cents per share and stood at 72 cents per share.

Other updates - Despite staffing issues, the company reported US same-store sales growth of 18% from a year earlier and 12% on a two-year basis. Active 90-day users of its Starbucks Rewards program rose 21% to 26.4 million people.

Earnings Outlook - For FY22, the company updated its earning outlook cutting increased costs due to omicron.  It now expects GAAP earnings per share to fall by a range of 4% to 6%. Also, adjusted earnings per share to rise by 8% to 10%.

Last quarter, it said, it was anticipating GAAP earnings per share to fall by 4% and adjusted earnings per share to rise by at least 10%. The company reiterated its revenue outlook of $32.5 billion to $33 billion.

Target price - The 29 analysts offering 12-month price forecasts for Starbucks Corp have a median target of $122, with a high estimate of $142 and a low estimate of $104.

The Starbucks share closed 0.45% higher on Tuesday at $98.76 per share.

Starbucks Q1: INDmoney Review

The company's earnings fell short of Wall Street's expectations, but the company's quarterly revenue topped estimates. It saw higher than expected costs throughout the supply chain and a resurgence of Covid-19 meant paying more employees sick leave. The sale from China's store fell considerably, and the outlook does not look good for the company months.