Starbucks FQ3 Earnings Preview: What to expect after unionization, reopening of China stores?
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Retailer of specialty coffee, Starbucks (NASDAQ:SBUX) is scheduled to announce FQ3 earnings results on Tuesday, August 2nd, after market close.
The consensus EPS Estimate is $0.76 (-24.8% Y/Y) and the consensus Revenue Estimate is $8.13B (+8.4% Y/Y).
Earnings history:

The company suspended its guidance for the remainder of the fiscal year after missing the consensus mark in FQ2 due to China's tough COVID-19 curbs.
Net revenue in China declined 14% and sales comp declined 20% Y/Y.
The company said 75% of the net new stores in fiscal '22 to be open outside the U.S., further underscoring the enormous global and the opportunity ahead.
Over the last 2 years, SBUX has beaten EPS estimates 75% of the time and has beaten revenue estimates 50% of the time. 


Over the last 3 months, EPS estimates have seen 0 upward revisions and 27 downward. Revenue estimates have seen 2 upward revisions and 19 downward.
Highlights:
The company reopened 600 out of 940 stores in China during the quarter. Chinese operations have been considered a major growth driver for the company and in recent earnings call, interim CEO Howard Schultz said that he expects the companyâs Chinese business to eventually be bigger than its US business.
Howard Schultz warned more store closures in the coming times; it has announced 16 store closures in major cities citing safety issues.
The coffee chain recently offloaded its Russian business and is considering the sale of its UK business.
The company which has been dealing with recent unionization efforts of its U.S. workforce is looking for a permanent successor meanwhile Howard Schultz remains the interim CEO.
Analyst Rating:

Citi analyst Jon Tower raised the price target to $84 from $76 and maintained a Neutral rating on the shares. Investors may have to wait another earnings season before "getting the full monty" on the company's longer-term vision of the business, Tower tells investors in a research note. However, the thinks management "will tease the idea" that labor investment may be modest, and Starbucks "may meaningfully accelerate" U.S. unit growth over the next 12-24 months. For the quarter, he expects U.S. comp upside vs. the Street.
Morgan Stanley analyst John Glass raised price target on Starbucks to $88 from $87 with an Equal Weight rating on the shares. Glass is reducing second half and 2023 estimates across much of his restaurant and foodservice distributors coverage ahead of Q2 earnings reporting to reflect expected softening sales as consumers face rising pressures. On average, he cut his full service estimates by 5% for 2022 and 11% for '23 and cut fast casual estimates by about 2% in each year.
Piper Sandler analyst Nicole Miller Regan raised the target to $84 from $80 and maintained a Neutral rating on the shares. For Q3, the analyst says her North America same-store sales of up 7.0% could prove conservative versus the Street at +8.8% based on her field checks during the quarter which indicated no material degradation of demand. Miller Regan rolled her price target for Starbucks to fiscal year 2023.
Deutsche Bank analyst Brian Mullan lowered the price target on Starbucks (SBUX) to $91 from $103 and keeps a Buy rating on the shares ahead of the company's Q3 results. The analyst's sense is that investors are expecting to see a U.S. sane-store-sales result in the up 9% range, which compares to current consensus of up 8.6%.
Stock gets a Buy rating from Wall Street Analysts, based on 10 of 33 analystsâ ratings of Strong Buy; 6 analysts ratings of Buy and 17 analysts ratings of Hold.

On YTD basis, stock saw a downside of ~27%.