On Thursday, after the market closes, Starbucks (SBUX) will report its financial results for the first quarter of its fiscal year 2023.
Optimism regarding China’s reopening and the continued devotion of US consumers to their coffee habits have contributed to a more than 12% increase in Starbucks stock price over the past year. Using estimates provided by StreetAccount, the financial markets anticipate that the coffee giant will report same-store sales growth of 10.1% in North America.
Second-Largest Market In China
Strike activity from unionized Starbucks employees increased in November and December, but a Barclays report found that it had no effect on holiday sales.
According to figures from the National Labor Relations Board as of January 23rd, nearly 280 company-owned Starbucks cafes have voted to unionize. For the newly unionized Starbucks stores, a contract has not yet been negotiated between the union and Starbucks.
China is the company’s second-largest market, but it is unlikely that this fact will be lost on investors. The Chinese government has recently eased its zero Covid policy, which will be beneficial to Starbucks’ sales in the long run in the country. The dramatic increase in new Covid cases may temporarily impede the company’s recovery.
When asked about its financial outlook for fiscal 2023, Starbucks said it expected revenues to grow by 10% to 12% and adjusted EPS to grow by at least 15% to 20%.
Here is what Wall Street anticipates from the mega-coffee chain, according to Bloomberg’s estimates.
- Revenue: $8.75 billion, up 8.6% year-over-year
- Adjusted earnings per share: $0.77 per share, up 2.7% year-over-year
- U.S. same-store sales: up 9.26%
- International sales: down 3.87%
- China sales: down 13.31%
Another Positive Store-Sales Growth For Starbucks
Analysts also anticipate positive same-store sales growth for Starbucks’ US business of 9.26%. Consumers in the United States are widely predicted to maintain their brand loyalty to Starbucks despite rising prices.
UBS analyst Dennis Geiger attributes the country’s upbeat trend to a number of factors, including the popularity of cold beverages (which account for 76% of total beverage sales), new product introductions, food complements, and competitive pricing.
UBS, which rates the stock Neutrally and has set a price target of $110.00, is also monitoring consumer spending habits.
Changes to the Starbucks rewards program will be implemented on February 13, so investors will be listening for any news about the program on the earnings call. Consumers are frustrated by the new policy because it raises the cost to earn the required number of stars for freebies, but investors are eager to hear about the opportunities for higher margins that the change presents.
Stifel estimates that same-store sales will increase by 1% to 3% as a result of the shift, assuming no impact on purchase frequency from loyalty customers. Count this as the third alteration since 2016.
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