Starbucks loses 1% in the stock market despite upbeat quarterly performance results

Starbucks printed better than expected results in its quarterly earnings report on Tuesday. Despite the upbeat performance, Starbucks was seen trading around 1% lower in extended trading as investors remained wary of the company’s warning that the recent outbreak of Coronavirus in China can severely hurt the outlook for 2020.

Starbucks also announced on Tuesday that over 50% of its Chinese stores have been temporarily closed. According to the Chief Financial Officer, Pat Grismer, to what extent does the performance go down is largely dependent on for how long do the stores remain closed. It was previously expected of Starbucks to raise its guidance for 2020 following the quarterly results. In the wake of the virus outbreak, however, the company has chosen to refrain from it.

Starbucks’ Figures Versus Analysts’ Estimates

In the fiscal first quarter, Starbucks was expected to generate $7.1 billion in revenue, as per Refinitiv’s data. In terms of earnings per share (EPS), analysts had anticipated 76 cents in Q1. While the company aligned exactly with the revenue forecast, Tuesday’s report highlighted a slightly higher 79 cents of earnings per share for Starbucks in the first quarter. Experts had also forecast a 4.4% quarterly increase in same-store sales versus a 5% growth that was posted in the earnings report.

Starbucks is now expecting a 6% to 8% growth in its revenue in fiscal 2020. Same-store sales, on the other hand, are likely to record a 3% to 4% surge. The company representative, however, highlighted that the current guidance doesn’t take into account the potential impact of the Coronavirus outbreak that remains a factor of uncertainty.

Net Income Climbed 15% In Q1 As Compared To Last Year

At $885.7 million, Q1 net income for the global coffee chain marked an around 15% increase as compared to last year when it was recorded at $760.6 million. Net sales were in line with the forecast at $7.1 billion that marked a 7% increase. Same-store sales in the United States were highlighted to have climbed 6% in the recent quarter. Starbucks cited the newly launched cold drinks like Irish Cream Cold Brew, and Pumpkin Cream Cold Brew to have contributed to the risen sales during the holiday season.

Starbucks further added in its report that 1.4 million new customers (16% increase as compared to last year) subscribed to its loyalty program in the U.S. In total, Starbucks Rewards now have 18.9 million active members in the U.S.

At the time of writing, Starbucks is trading at $88.60 in the stock market. Share prices opened at $89.35 at the start of January.