Coffeehouse chain Starbucks (NASDAQ:SBUX) missed analysts' expectations in Q1 CY2024, with revenue down 1.8% year on year to $8.56 billion. It made a non-GAAP profit of $0.68 per share, down from its profit of $0.74 per share in the same quarter last year.
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Starbucks (SBUX) Q1 CY2024 Highlights:
- Revenue: $8.56 billion vs analyst estimates of $9.16 billion (6.5% miss)
- EPS (non-GAAP): $0.68 vs analyst expectations of $0.80 (15.2% miss)
- Gross Margin (GAAP): 25.6%, down from 26.2% in the same quarter last year
- Free Cash Flow of $629.9 million, down 64.8% from the previous quarter
- Same-Store Sales were down 4% year on year
- Store Locations: 38,951 at quarter end, increasing by 2,317 over the last 12 months
- Market Capitalization: $100 billion
Started by three friends in Seattle’s historic Pike Place Market, Starbucks (NASDAQ:SBUX) is a globally-renowned coffeehouse chain that offers a wide selection of high-quality coffee, beverages, and food items.
Traditional Fast FoodTraditional fast-food restaurants are renowned for their speed and convenience, boasting menus filled with familiar and budget-friendly items. Their reputations for on-the-go consumption make them favored destinations for individuals and families needing a quick meal. This class of restaurants, however, is fighting the perception that their meals are unhealthy and made with inferior ingredients, a battle that's especially relevant today given the consumers increasing focus on health and wellness.
Sales GrowthStarbucks is one of the most widely recognized restaurant chains in the world and benefits from brand equity, giving it customer loyalty and more influence over purchasing decisions.
As you can see below, the company's annualized revenue growth rate of 7.4% over the last five years was decent as it opened new restaurants and grew sales at existing, established dining locations.
This quarter, Starbucks missed Wall Street's estimates and reported a rather uninspiring 1.8% year-on-year revenue decline, generating $8.56 billion in revenue. Looking ahead, Wall Street expects sales to grow 10.7% over the next 12 months, an acceleration from this quarter.
Same-Store SalesA company's same-store sales growth shows the year-on-year change in sales for its restaurants that have been open for at least a year, give or take. This is a key performance indicator because it measures organic growth and demand.
Starbucks's demand within its existing restaurants has generally risen over the last two years but lagged behind the broader sector. On average, the company's same-store sales have grown by 5.6% year on year. With positive same-store sales growth amid an increasing number of restaurants, Starbucks is reaching more diners and growing sales.
In the latest quarter, Starbucks's same-store sales fell 4% year on year. This decline was a reversal from the 11% year-on-year increase it posted 12 months ago. We'll be keeping a close eye on the company to see if this turns into a longer-term trend.
Key Takeaways from Starbucks's Q1 Results We struggled to find many strong positives in these results. Its revenue and EPS unfortunately missed analysts' expectations as its same-store sales declined by 4% (driven by a 6% decline in volumes offset by a 2% increase in prices). Starbucks's demand in China was especially weak as its same-store sales fell 11%. Management highlighted its disappointment with the results and called out a challenging operating environment. Overall, this was a bad quarter for Starbucks. The company is down 8.7% on the results and currently trades at $80.77 per share.
