Starbucks' NASDAQ: SBUX struggles with growth are not over, but signs are emerging that it is on track to return to growth soon. While Q3 results were mixed, the company expects sequential improvements to accelerate, reaffirming guidance for the year. The takeaway for investors is that price action in SBUX shares is picking up, and a reversal should come soon. If the FOMC follows through with its rate cuts, the reversal will gain momentum and could take the stock price back to recent highs by the end of 202 ...

Shares of Starbucks Corp SBUX were climbing in early trading on Wednesday, despite the company reporting downbeat fiscal third-quarter sales.The results came amid an exciting earnings season. Here are some key analyst takeaways. Check out other analyst stock ratings.Wedbush: Starbucks reported its adjusted earnings at 93 cents per share, slightly missing the consensus of 94 cents per share, Setyan said in a note. While U.S. same-store sales (SSS) growth came in-line, International SSS growth missed consensu ...

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Financial Data and Key Metrics Changes - The total company revenue for Q3 2024 was $9.1 billion, representing a 1% increase year-over-year and a 6% increase over Q2 [6][31] - Global comparable store sales declined by 3% year-over-year, with a negative 2% comp growth in North America and a negative 14% comp growth in China [6][31] - The global operating margin contracted by 70 basis points to 16.7%, and earnings per share for the quarter was $0.93, down 6% from the prior year [6][38] Business Line Data and Key Metrics Changes - The US business saw a 4% increase in average ticket driven by pricing and multi-beverage orders, while transactions in the US posted a comparable decline of 6% [31][32] - Mobile Order & Pay revenue grew by 10% year-over-year, with a 7% increase in transactions [22][32] - Starbucks Rewards membership in the US grew to 33.8 million, with increased frequency of visits across all deciles [20][33] Market Data and Key Metrics Changes - The company faced challenges in international markets, particularly in China, where consumer spending was cautious and competition intensified [24][25] - In China, average daily transactions, weekly sales, and operating margin improved sequentially quarter-over-quarter, with Starbucks Rewards members growing to a record 22 million [26][29] - Strong performance was noted in Japan and parts of Latin America, contrasting with headwinds in the Middle East and Southeast Asia [24][25] Company Strategy and Development Direction - The company is focused on a three-part action plan to improve US store operations, attract new customers, and enhance the customer experience [7][8] - There is an emphasis on operational excellence and efficiency improvements across nearly 10,000 US stores, with significant changes expected to drive growth [9][10] - The company is exploring strategic partnerships in China to enhance competitive positioning and accelerate growth [29][61] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the trajectory of the US business and the operational improvements being made, despite current challenges [24][30] - The company acknowledged the cautious consumer environment impacting sales and emphasized the importance of targeted offers and promotions to drive traffic [19][66] - Future product offerings, including seasonal items, are expected to drive customer interest and engagement [18][42] Other Important Information - The company plans to accelerate new store builds and renovations, with 580 net new builds and over 800 renovations planned in North America for FY 2024 [13][39] - The company is committed to maintaining a disciplined approach to capital allocation, targeting an earnings payout ratio of approximately 50% [41][42] - The fourth quarter and full fiscal year 2024 earnings conference call is tentatively scheduled for October 30, 2024 [5] Q&A Session Summary Question: Margin and Cost Actions - Management discussed a 5% year-over-year decline in G&A, driven by lower performance-based compensation and cost efficiencies [46] - Future reinvestments will focus on supporting promotional activities and partner wages [47] Question: Composition of Average Check - The average ticket increase included 25% from multi-beverage orders, indicating a response to promotional offers rather than premiumization [49][50] - The promotional intensity was lower than competitors, with 14% of transactions driven by offers [51] Question: Challenges in China - Management acknowledged significant headwinds in China but emphasized the long-term potential and distinctive advantages of their business [25][60] Question: Decline in Non-Rewards Customers - The decline in non-rewards customers was attributed to a challenging consumer environment, with efforts to improve value communication [66] Question: Siren Systems and Returns - The company is on track with Siren system deployments, focusing on targeted improvements in stores with the highest customer service outages [71][74] Question: Sales Performance and Future Expectations - Management expects Q4 comp growth to be flat to low-single digits, with actions in place to strengthen growth for FY 2025 [79][80]

Some Starbucks customers faced a disruption on Tuesday (July 30) as the company’s mobile ordering system failed for the second time this month.The outage, affecting several major U.S. cities, left patrons dealing with long lines and forced to place orders in person, just as the company was gearing up for a major “buy one, get one free” promotion.This latest technological glitch compounded Starbucks’ recent challenges, as the company reported mixed financial results for its fiscal third quarter ending June 3 ...

For the quarter ended June 2024, Starbucks (SBUX) reported revenue of $9.11 billion, down 0.6% over the same period last year. EPS came in at $0.93, compared to $1.00 in the year-ago quarter.The reported revenue represents a surprise of -1.19% over the Zacks Consensus Estimate of $9.22 billion. With the consensus EPS estimate being $0.93, the company has not delivered EPS surprise.While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall ...

Starbucks (SBUX) came out with quarterly earnings of $0.93 per share, in line with the Zacks Consensus Estimate. This compares to earnings of $1 per share a year ago. These figures are adjusted for non-recurring items.A quarter ago, it was expected that this coffee chain would post earnings of $0.79 per share when it actually produced earnings of $0.68, delivering a surprise of -13.92%.Over the last four quarters, the company has surpassed consensus EPS estimates just once.Starbucks, which belongs to the Za ...

Key TakeawaysStarbucks same-store sales fell 3% in the latest quarter after dropping 4% in the prior quarter.The company posted revenue of $9.1 billion, 1% lower year-over-year and below analysts' expectations.CFO Rachel Ruggeri said the company is ahead of schedule with its efficiency efforts. Starbucks Corp. (SBUX) missed revenue expectations with its fiscal third-quarter results, driven in part by a decline in same-store sales. The coffee titan reported revenue of $9.1 billion, down 1% year-over-year and ...

Asset Sales and Gains - The company sold assets related to the Seattle's Best Coffee brand to Nestlé for $110.0 million, resulting in a pre-tax gain of $91.3 million[25]. Segment Disclosure and Tax Guidance - The company expects to adopt new segment disclosure requirements for the fiscal year ending September 28, 2025, which may not have a material impact on consolidated financial statements[24]. - The company anticipates significant impacts on annual income tax disclosures due to new guidance effective for the fiscal year ending September 27, 2026[24]. Hedging Activities - The company entered into cash flow hedges for coffee, with gains of $33.6 million recorded in AOCI as of October 1, 2023[30]. - The company reported a net investment hedge with cross-currency swaps showing gains of $202.5 million as of October 1, 2023[30]. - The company recorded a pre-tax loss of $4.3 million related to interest rate hedges as of June 30, 2024[30]. - The company has forward contracts to hedge anticipated cash flows under dairy purchase contracts, with gains recorded in AOCI[29]. - The company reported a gain of $10.6 million from cash flow hedges related to coffee for the quarter ended June 30, 2024[32]. - As of June 30, 2024, the notional amounts of outstanding derivative contracts include $73 million in coffee and $1,730 million in cross-currency swaps[35]. - The fair value of outstanding derivative contracts on the balance sheet includes $3,179.1 million in cash and cash equivalents and $70.5 million in total available-for-sale debt securities[39]. - The company has $36.9 million in derivative liabilities recorded as of June 30, 2024[39]. - Interest income from foreign currency derivatives was reported at $3.4 million for the quarter ended June 30, 2024, compared to a loss of $(10.0) million in the previous quarter[34]. - The company’s interest expense from fair value hedges was $(2.7) million for the quarter ended June 30, 2024[34]. - The total liabilities related to derivatives are $40.1 million as of June 30, 2024[39]. Financial Position and Assets - Total assets as of October 1, 2023, were $4,394.3 million, with cash and cash equivalents at $3,551.5 million[41]. - Total liabilities amounted to $46.8 million, with derivative liabilities at $43.2 million[41]. - Inventory levels as of June 30, 2024, reached $1,854.7 million, an increase from $1,806.4 million on October 1, 2023[44]. - Goodwill balance as of June 30, 2024, was $3,183.6 million, down from $3,218.3 million on October 1, 2023[51]. - Total long-term investments as of June 30, 2024, were valued at $142.6 million, with U.S. government treasury securities at $104.7 million[41]. - Total short-term investments amount to $212.3 million, with marketable equity securities valued at $86.6 million[39]. Revenue and Earnings - Total net revenues for the quarter ended June 30, 2024, were $9,113.9 million, a slight decrease from $9,168.3 million in the same quarter last year[75]. - Net earnings attributable to Starbucks for the quarter were $1,054.8 million, compared to $1,141.7 million in the prior year, reflecting a decrease of approximately 7.6%[72]. - Basic EPS for the quarter was $0.93, down from $1.00 in the same quarter last year, indicating a decline of 7%[72]. - Operating income for the quarter was $1,517.5 million, compared to $1,583.9 million in the prior year, representing a decrease of about 4.2%[75]. Store Operations and Expenses - Store operating expenses for the quarter ended June 30, 2024, were $3,829.1 million, compared to $3,697.6 million for the same quarter in the previous year[47]. - Total store operating expenses for the three quarters ended June 30, 2024, were $11,404.7 million, compared to $10,998.9 million for the same period in the previous year[47]. - Operating lease costs for the quarter ended June 30, 2024, were $431.3 million, compared to $401.6 million for the same quarter in the previous year[59]. - Total lease costs for the three quarters ended June 30, 2024, were $2.1 billion, an increase from $1.96 billion in the prior year[59]. Shareholder Returns and Stock Activity - The company repurchased 12.8 million shares of common stock for $1,250.1 million during the three quarters ended June 30, 2024, compared to 6.9 million shares for $699.3 million in the same period last year[68]. - A quarterly cash dividend of $0.57 per share was approved by the Board of Directors, to be paid on August 30, 2024[68]. - The stock-based compensation expense for the quarter ended June 30, 2024, was $63.5 million, compared to $69.2 million for the same quarter in 2023, reflecting a decrease of approximately 2.5%[68]. Operational Challenges and Market Conditions - The company is closely monitoring the operational and financial impacts of labor union organizing efforts, with management believing the risk of material contingent loss is remote[71]. - Starbucks reported a 1% decrease in consolidated net revenues to $9.1 billion for Q3 fiscal 2024, down from $9.2 billion in Q3 fiscal 2023, primarily due to a decline in global comparable store sales and unfavorable foreign currency fluctuations[82]. - Global comparable store sales declined by 3% in Q3 fiscal 2024, with a 2% decline in the U.S. market and a 7% decline internationally[82]. - The operating margin decreased by 60 basis points to 16.7%, driven by increased promotional activity and investments in partner wages and benefits[82]. Future Outlook and Strategic Initiatives - The company anticipates continued progress on action plans to increase demand through innovative beverage and food offerings while expanding efficiency efforts[82]. - The company operates over 39,400 stores globally, reflecting a 6% increase from the prior year[82].

Financial Performance - Q3 consolidated net revenues were $9.1 billion, down 1% year-over-year, but up 1% in constant currency[1] - Total net revenues for the quarter ended June 30, 2024, were $9,113.9 million, a decrease of 0.6% compared to $9,168.3 million for the quarter ended July 2, 2023[25] - Total net revenues for the three quarters ended June 30, 2024, were $27,102.3 million, reflecting a 1.9% increase from $26,602.0 million for the same period last year[27] - Revenues for the quarter ended June 30, 2024, were $6,366.8 million, representing a 2% increase from $6,272.3 million in the prior year[42] - Total net revenues for the three quarters ended June 30, 2024, were $20,317.6 million, a 3.3% increase from $19,669.7 million in the previous year[29] Earnings and Margins - Net earnings attributable to Starbucks for the quarter ended June 30, 2024, were $1,054.8 million, down 7.6% from $1,141.7 million in the same quarter last year[25] - Net earnings for the quarter ended June 30, 2024, were $2,852.7 million, a decrease of 1.8% compared to $2,905.4 million for the same period in 2023[39] - Operating margin for North America contracted 70 basis points to 21.0% due to increased promotional activity and investments in wages[4] - Operating margin for the International segment contracted 340 basis points to 15.6%, driven by promotional activities and strategic investments[6] - Reported operating income (GAAP) was $1,517.5 million, a decrease of 4.2% from $1,583.9 million[53] - Non-GAAP operating income was $1,517.5 million, down 4.6% from $1,591.0 million[53] - Reported operating margin (GAAP) decreased to 16.7%, down 60 basis points from 17.3%[53] - Non-GAAP operating margin was 16.7%, a decline of 70 basis points from 17.4%[53] Store Performance and Growth - Active U.S. Starbucks Rewards membership totaled 33.8 million, up 7% year-over-year[2] - Global comparable store sales declined 3%, with a 5% decline in comparable transactions, partially offset by a 2% increase in average ticket[2] - The company opened 526 net new stores in Q3, ending with a total of 39,477 stores globally[2] - The company opened 133 net new stores in North America during the quarter, bringing the total to 18,198 stores[44] - The total number of stores in China increased to 7,306, a 13% increase from 6,480 stores in the previous year[43] Segment Performance - North America segment revenues increased 1% to $6.8 billion, driven by net new store growth of 5%[3] - International segment revenues declined 7% to $1.8 billion, impacted by a 5% unfavorable foreign currency translation[5] - Company-operated stores in North America generated revenues of $6,135.0 million, up 0.9% from $6,080.6 million year-over-year[29] - International total net revenues for the quarter ended June 30, 2024, were $1,842.1 million, a decrease of 6.6% from $1,972.9 million in the prior year[31] - Company-operated stores in the international segment generated revenues of $1,381.0 million, down 6.4% from $1,476.1 million year-over-year[31] Expenses and Costs - Store operating expenses as a percentage of company-operated store revenues increased to 50.9% from 48.9% year-over-year[25] - Total operating expenses in North America increased by 2.1% to $5,384.0 million from $5,273.9 million year-over-year[29] - Total operating expenses in the international segment were $1,557.1 million, a decrease of 2.6% from $1,599.2 million in the prior year[31] - Product and distribution costs decreased by 12.0% to $257.7 million, representing 58.8% of total net revenues, down from 65.3%[33] - Total operating expenses for the three quarters decreased by 14.4% to $838.2 million, representing 64.3% of net revenues, down from 69.6%[33] Cash Flow and Dividends - The company reported a net cash provided by operating activities of $4,560.0 million for the quarter, an increase from $4,063.7 million in the same period last year[39] - Cash dividends declared per share increased to $1.71 from $1.59 year-over-year[27] - Cash dividends paid during the quarter totaled $1,939.0 million, compared to $1,824.8 million in the previous year[39] - The company experienced a net cash used in investing activities of $1,849.5 million, up from $1,406.2 million in the prior year[39] Balance Sheet and Tax - Total assets as of June 30, 2024, were $30,111.8 million, an increase from $29,445.5 million on October 1, 2023[37] - Current liabilities decreased to $7,649.5 million from $9,345.3 million, reflecting improved liquidity[37] - The total shareholders' deficit was $7,945.4 million as of June 30, 2024, compared to $7,994.8 million on October 1, 2023[37] - The effective tax rate including noncontrolling interests was 24.4%, up from 23.7% in the previous year[27] Other Financial Metrics - Interest income and other, net, increased by 87.9% to $96.0 million compared to $51.1 million in the prior year[27] - Depreciation and amortization expenses for the three quarters ended June 30, 2024, were $1,117.6 million, a 10.5% increase from $1,011.2 million in the same period last year[27] - The company reported an income from equity investees of $194.9 million for the three quarters, an increase of 10.1% compared to $177.0 million last year[33] - For the quarter ended June 30, 2024, the operating loss was $437.9 million, an improvement of 5.3% from a loss of $462.5 million in the same quarter last year[34]