Starbucks (SBUX) earnings report: revenue misses expectations, EPS declines, stock drops

By:
on Apr 30, 2024
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  • In its earnings report today, Starbucks reported Non-GAAP EPS of $0.68, missing expectations by $0.12.
  • Starbucks' revenue for Q1 was $8.56 billion, also missing expectation by $600 million.
  • Global comparable store sales declined 4%, while North America and U.S. comparable store sales declined 3%.

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Starbucks Corporation (NASDAQ: SBUX) has reported a revenue miss in its Q1 2024 earnings report, disappointing investors and causing the SBUX stock price to drop by over 10% in the market after hours.

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The company’s consolidated net revenues for the quarter were down 2% to $8.6 billion, falling short of market expectations. The decline was attributed to a challenging operating environment faced by the coffee giant.

Starbucks performs poorly in Q1

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Despite active U.S. Starbucks (SBUX) Rewards Membership increasing by 6% over the prior year, global comparable store sales experienced a 4% decline, driven by a 6% decrease in comparable transactions. This decline led to a 2% reduction in consolidated net revenues, down to $8.6 billion.

The company reported both GAAP and Non-GAAP EPS of $0.68, falling short of expectations by $0.12. Starbucks attributed the decline in revenue and EPS to a complex operating environment. Despite the challenges, Starbucks emphasized that its long-term strategy remains intact.

In the North America segment, comparable store sales declined by 3%, with a 7% decrease in comparable transactions, partially offset by a 4% increase in average ticket. Operating income contracted to $1.1 billion compared to $1.2 billion in the prior year, leading to a contraction in operating margin to 18.0%.

In the International segment, net revenues decreased by 5% to $1.8 billion, primarily due to a decline in comparable store sales by 6%. Operating income also declined to $233.8 million compared to $314.7 million in the prior year, resulting in a contraction in operating margin to 13.3%.

The Channel Development segment experienced a 13% decline in net revenues to $418.2 million, primarily due to a decrease in revenue in the Global Coffee Alliance. Operating income also decreased to $216.3 million compared to $262.1 million in the prior year, leading to a contraction in operating margin to 51.7%.

Starbucks (SBUX) stock plummet

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Following the lower-than-expected revenue and drop in EPS figures, Starbucks (SBUX) stock dropped by 10.39% in the market after-hours to trade at $ 88.49 at press time.

The disappointing results have prompted concerns about Starbucks’ ability to navigate the challenges posed by the current operating environment.

Nevertheless, the company continues to focus on enhancing the Starbucks Rewards loyalty program, expanding its store footprint, and exploring new market opportunities. However, the latest earnings report highlights the need for Starbucks to address the challenges impacting its financial performance and reassure investors of its resilience in the face of adversity.

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