Starbucks reported worse-than-predicted fiscal first-quarter earnings and revenue late Tuesday and issued tempered 2024 guidance, revising lower its business expectations for China. SBUX gained ground early before falling Wednesday.
The Seattle-based coffee megalith announced Tuesday that Q1 earnings grew 20% to 90 cents per share while revenue increased 8% to $9.43 billion. Analysts had predicted EPS of 93 cents and sales totaling $9.59 billion.
Starbucks stock advanced before falling more than 1% to 93.03 Wednesday during market action. SBUX shares have largely been in a downtrend since April.
Chief Executive Laxman Narasimhan told investors on the earnings call Tuesday that the company has run into difficulties in China and the Middle East.
"We saw a negative impact to our business in the Middle East," Narasimhan said, referring to the Israel-Hamas war. "Events in the Middle East also had an impact in the U.S., driven by misperceptions about our position."
Narasimhan added that Starbucks experienced a "slower-than-expected recovery in China, driven by a more cautious consumer."
"In China, we remain very confident in the long term," the chief executive said. "The market is going through a transition as we see an increase in mass market competitors, which we believe will shake out over time, and the market will emerge looking fundamentally different than what we see today."
Starbucks Earnings: 2024 Guidance
Meanwhile, Starbucks executives on the earnings call Tuesday outlined their 2024 forecast.
The company maintained its 15%-20% EPS growth target. However, Starbucks now projects 2024 revenue growth in the range of 7%-10%, down from its previous range of the low end of 10%-12%. Starbucks is also predicting full-year global and U.S. comparable sales growth in the range of 4%-6%, both revised from the previous range of 5%-7%.
In China, SBUX expects comparable sales growth in the low single-digits for 2024, revised from its previous range of 4%-6% in Q2 through Q4.
Fed Rate Cuts: Is The S&P 500 About To Party Like It's 1999 Again?
Shares of SBUX stock rallied 4.7% in premarket trade. That pointed to an open above the stock's 50-day moving average. Starbucks has been locked in a consolidation since May.
Starbucks stock has a 56 Composite Rating out of 99. SBUX has a 22 Relative Strength Rating , an exclusive IBD Stock Checkup gauge for share-price movement. The EPS Rating for Starbucks stock is 89.
Please follow Kit Norton on X, formerly known as Twitter, @KitNorton for more coverage.
