Starbucks beat earnings estimates: US consumer stays resilient, but China pulls back

Starbucks (SBUX) brewed up some fiscal Q4 earnings early Thursday morning. While it beat most estimates, it was a tale of two countries.

US consumers are still willing to splurge for their pumpkin spice and chai tea lattes, but Chinese consumers are tightening their wallets.

Starbucks’ overall revenue is up 11% to nearly $9.4 billion, higher than the $9.28 billion expected from Wall Street, while adjusted earnings per share came in at $1.06, which also beat estimates of $0.97.

Global same-store sales jumped 8%, driven by a 4% increase in ticket size and 3% increase in traffic.

In North America and the US, consumers were willing to pay more for their premium seasonal beverage, and added a record amount of food to their order. Same-store sales were up 8% in the US.

“Heightened promotional activity plus the earlier launch of Pumpkin and fall drink lineup likely supported traffic in a difficult discretionary spending backdrop,” Baird analyst David Tarantino said in a note to clients ahead of earnings. This past quarter marked the pumpkin spice latte’s 20th anniversary.

Its international business saw weakness with ticket size falling lower, as coffee drinkers in China pull back.

International same-store sales jumped 5%, less than 6.29% expected by Wall Street. China’s same-store sales are up 5%, beating estimates. But even though foot traffic increased 8%, people ordered less, as the average ticket size fell 3%.

In the release, CEO Laxman Narasimhan said “in the face of macro uncertainty” the team is “confident” in the “momentum throughout our business and headroom globally.”

Starbucks’ has invested more in its international business over the years. It recently announced its 20,000th location outside of North America and plans to expand to 9,000 stores in China over the next two years.

At the end of last quarter, stores in the U.S. (16,352 locations) and China (6,806 locations) made up 61% of the company’s global portfolio.

The company added 816 new stores last quarter, bringing the total to 38,038 stores, with 52% company-operated and 48% licensed locations.

Its loyalty program continues to gain momentum. In Q4, active reward members in the US, who typically spend more, jumped 14% year-over-year to 32.6 million.

Earnings breaking

Here’s what Starbucks reported, compared to Wall Street expectations for Q4, based on Bloomberg consensus estimates.

Revenue: $9.37 billion versus $9.28 billion expected

Adjusted per share: $1.06 versus $0.97 expected

Same-store sales: 8% versus 6.31% expected

Traffic growth same-store sales: 3% versus 3.11% expected

Ticket growth: 4% versus 3.31% expected

KUNSHAN, CHINA - SEPTEMBER 19: General view of Starbucks' Coffee Innovation Park on September 19, 2023 in Kunshan, Jiangsu Province of China. Starbucks opened a new coffee innovation park in Kunshan on September 19. (Photo by VCG/VCG via Getty Images)

General view of Starbucks’ Coffee Innovation Park on Sept. 19, 2023, in Kunshan, Jiangsu Province of China. (Photo by VCG/VCG via Getty Images)

Stocks of food and beverage companies have been hit by uncertain consumer sentiments and fears about weight loss drugs. Shares of Starbucks are down more than 8% this year, compared to the S&P 500’s (^GSPC) gain of 9.5%.

After market close on Thursday, the company is set to host an update on the Reinvention Plan it announced last September, which includes a set of initiatives aimed at driving growth by 2025. The investments include updates to its store equipment, digital experience, menu innovation, and expansion of its international operations.

In a note to clients, Bernstein analyst Danilo Gargiulo said investors have “expressed skepticism” in Starbucks’ “ability to meet management’s ambitious goals.”

Post-COVID recovery and consumer spending levels are still uncertain, while the labor shortage is ongoing. The company’s focus on investing in expensive equipment upgrades to increase store productivity may not produce the desired results, added Gargiulo.

Brooke DiPalma is a senior reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at

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