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Starbucks beats earnings estimates, but sales disappoint despite China boom - CNBC

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Starbucks logo is seen on a cup in this illustration photo taken in the cafe at the airport in Charleroi, Belgium on July 27, 2023. 
Jakub Porzyck | Nurphoto | Getty Images

Starbucks on Tuesday reported quarterly earnings that beat analysts' expectations, but its same-store sales missed Wall Street's estimates.

Still, the company reaffirmed its fiscal 2023 outlook during its conference call. Starbucks is projecting revenue growth of 10% to 12%. The company slightly raised its adjusted earnings-per-share growth outlook to 16% to 17%, up from the low end of 15% to 20%.

Shares of the company fell more than 1% in extended trading.

Here's what the company reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:

  • Earnings per share: $1 adjusted vs. 95 cents expected
  • Revenue: $9.17 billion vs. $9.29 billion expected

The coffee giant reported fiscal third-quarter net income attributable to Starbucks of $1.41 billion, or 99 cents per share, up from $912.9 million, or 79 cents per share, a year earlier.

The company's operating margin expanded to 17.3% from 15.9%, driven by improvements in pricing and productivity.

Excluding items, Starbucks earned $1 per share.

Net sales rose 12% to $9.17 billion.

The company's same-store sales grew 10%, falling short of StreetAccount estimates of 11%. Same-store sales growth in both North America and its international markets was softer than expected.

The coffee giant's North American same-store sales grew 7%, missing estimates of 8.4%. Starbucks said customer traffic grew 1% in the quarter.

Cold drinks accounted for three quarters of U.S. beverage orders as consumer preferences continue to shift away from hot coffee.

Outside North America, Starbucks' same-store sales increased 24%, falling short of estimates of 24.2%. Improved demand in China fueled the company's international growth. China's same-store sales skyrocketed 46% in the quarter.

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