Starbucks 4Q23 tops market expectations
- 4Q23 results came above market expectations on better-than-expected performances in both US and China
- Comparable store sales for 4Q23 rose by 8% year-over-year, driven by a 4% increase in the average ticket and a 3% rise in comparable transactions. In particular, China’s comparable store sales saw a 5% increase, fueled by an 8% growth in comparable transactions and a 3% decline in the average ticket.
- The FY24E guidance has been lowered, with top-line growth now anticipated to be between 10-12% year-over-year, while EPS is expected to grow by 15-20% year-over-year.
Starbucks released its 4QFY23 results, which exceeded market expectations. Global comparable store sales increased by 8%, driven by a 4% increase in the average ticket and a 3% rise in comparable transactions. Geographically, North America reported an 8% growth in comparable store sales, spurred by a 6% rise in the average ticket and a 2% increase in comparable transactions. International comparable store sales grew by 5%, with a 6% increase in comparable transactions and a 1% decline in the average ticket. China’s comparable store sales also rose by 5%, due to an 8% increase in comparable transactions, alongside a 3% decrease in the average ticket. Revenue for 4Q23 rose by 11% (or 12% on a currency-neutral basis), while operating margin expanded by 4 ppts to 18.2%, boosted by in-store operating efficiencies. EPS surged by 39% year-over-year to US$1.06 per share. Overall, FY23 revenue increased by 12% to US$36 billion, or 14% on a currency-neutral basis. Operating margin expanded by 2 ppts to 16.3%, lifted by pricing, sales leverage, and store efficiencies. EPS for FY23 rose by 27% year-over-year to US$3.58.
In 4Q23, Starbucks opened 816 net new stores, reaching a total count of 38,038 stores, with 52% operated by the company and 48% licensed. U.S. and China stores now comprise 61% of the global portfolio, with 16,352 and 6,806 stores in the U.S. and China, respectively. Looking ahead, Starbucks expects global same-store sales to grow at 5-7% p.a., lower than its long-term guidance of 7-9%. In China, sales growth is expected to be between 4-6%. Overall, revenue growth is projected to be between 10-12% year-over-year, with EPS growth expected to be between 15-20% year-over-year. The company plans to implement a US$3 billion efficiency program over the next three years. The focus will also be on enhancing the brand by strengthening and scaling its digital presence. Globally, Starbucks aims for a 4% net growth in new stores, targeting 20,000 stores in the U.S. and achieve a global footprint of 55,000 stores by 2030.