Starbucks reported Tuesday that U.S. sales fell 5% in the first quarter of fiscal year after a surge in new Covid-19 cases led to tighter food restrictions.
The company also announced that COO Roz Brewer will be leaving Starbucks in late February. Those familiar with the matter told CNBC later Tuesday that she would become the executive director of Walgreens. Your responsibilities will be shared among other members of the existing Starbucks executive team.
In extended trading, stocks fell around 1%.
The company reported for the quarter ended December 27, versus Wall Street expectations, based on an analyst survey conducted by Refinitiv:
- Earnings per share: 61 cents, adjusted compared to 55 cents expected
- Revenue: $ 6.75 billion versus $ 6.93 billion expected
The company reported net income of $ 622.2 million, or 53 cents per share, for the first quarter, compared to $ 885.7 million, or 74 cents per share, a year earlier.
Without articles, the coffee giant earned 61 cents per share, exceeding the analysts surveyed by Refinitiv, 55 cents per share.
Net sales were down 5% to $ 6.75 billion, below expectations of $ 6.93 billion. Worldwide sales in the same store decreased by 5%. The company saw 19% fewer transactions in the quarter, but the average ticket increased 17%.
In the US, sales in the same store were down 5%. The company’s recovery in its home market was hampered by a further surge in Covid-19 cases as temperatures turned colder. Sales in the same store only decreased 3% in October but declined to 8% by December.
On the positive side, the number of Starbucks Rewards members who have been active in the past 90 days has increased 15% to 21.8 million people. Mobile orders accounted for a quarter of transactions, down from 17% before the crisis.
CEO Kevin Johnson said the company was having a “very strong” holiday season. The activation of Starbucks gift cards exceeded the company’s forecasts. He called the Irish Cream Cold Brew a “new vacation favorite”. Launched in 2019, the drink follows the success of Pumpkin Cream Cold Brew, which overtook Pumpkin Spice Latte as a bestseller on the autumn menu.
In China, Starbucks’ second largest market, sales in the same store turned positive for the first time since the health crisis began. Revenue in the same store increased 5%, although transactions were still down from the same period last year.
The company opened 278 new Netto cafes in the quarter and now has nearly 33,000 locations.
For the next quarter, Starbucks predicts US sales growth of 5% to 10%. According to information from executives, sales in the same store should develop positively in January after the downward trend in December. In China, sales in the same business are expected to nearly double. The company expects earnings of 36 to 41 cents per share. Adjusted earnings per share of 45 to 50 cents are forecast.
The company also raised its outlook for FY 2021 results. Earnings per share are now expected to be between $ 2.42 and $ 2.62, compared to its previous forecast of $ 2.34 to $ 2.54.
CFO Pat Grismer said Starbucks will release a major update to its fiscal year outlook when it releases its next quarter results. He cited the volatility caused by the pandemic.
Read the full results report here.