Starbucks misses comparable sales estimates after North America transactions stall
TonyBaggett
Starbucks Corporation (NASDAQ:SBUX) reported global comparable store sales rose 10% during FQ3 to miss the consensus estimate of +11.1%. Average ticket was up 4% and transactions were up 5% during the quarter.
Total revenue was up 12.9% during the quarter to $9.2B.
Comparable sales in North America increased 7% vs. +8.1% consensus, driven by a 6% increase in average ticket and 1% rise in comparable transactions. Operating income was up 10% year-over-year. Operating margin fell to 21.7% of sales in the region from 22.0% a year ago.
International comparable sales rose 24% during the quarter vs. +24.2% consensus. China comparable store sales increased 46% vs. the consensus estimate for a 42% increase.
Active membership in Starbucks Rewards in the U.S. rose 15% to 31.4M during the quarter.
The company's consolidated non-GAAP operating margin jumped to 17.4% of sales from 16.9% a year ago. The margin increase was driven by sales leverage, pricing. and productivity improvement. Margin headwinds during the quarter included previously committed investments in labor, including enhanced store partner wages and benefits and higher general and administrative costs related to the SBUX Reinvention Plan. "The momentum we have built and strength we are seeing globally, gives us the confidence and optimism to close our fiscal year strong," noted CFO Rachel Ruggeri on the quarter.
Starbucks (SBUX) opened 588 net new stores during the quarter. The coffee chain ended the period with a record 37,222 stores globally.
Shares of Starbucks (SBUX) fell 0.85% in post-market trading on Tuesday to $100.38 following a 0.31% dip during the regular session. Guidance from Starbucks (SBUX) is expected on the earnings conference call.
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