Starbucks (SBUX) posted a 3% decline in global same-store sales for Q3, but business appears to be stabilizing. The stock received a boost today after the company reaffirmed its FY24 financial targets during last night's earnings call. Prior to today's gains, SBUX had dropped 22% year-to-date.
- FY24 Outlook:
- Revenue growth in the low-single digit range
- Global and U.S. comps down low-single digits to flat
- Operating margin approximately flat
- Improving throughput and speed of service
- Launching new menu items to boost foot traffic, which fell by 6% in Q3
- Offering more digital promotions to its membership base
- Challenges:
- U.S. comps down 2% on a 6% drop in transactions
- Sluggish demand from non-rewards members
- Cost-conscious consumers opting for home-brewed coffee
- China Market:
- Comps down 14% due to macro headwinds and competition
- Average check size fell by 7%
- Plans to expand store count to 9,000 by 2025
- Loyalty Program:
- U.S. rewards members grew by 7% year-over-year to 33.8 million
- Increased store visit frequency among active members
- Boost from new menu items like iced energy drinks and limited-time promotions
The main takeaway is that while significant improvements are hard to find, the company's performance and outlook were better than expected, providing some optimism that the worst may be over for SBUX.
