Starbucks (NASDAQ:SBUX) is scheduled to report a 31% decline in its fourth-quarter earnings on October 28, after market close.
Seeking Alpha’s consensus EPS Estimate is $0.55, while revenue is likely to come in at $9.35 billion, an improvement of 3.1% year-on-year.
Ahead of the coffee maker’s Q4 print, analysts have cautioned investors against the company’s declining same-store sales, which they expect to further widen in this quarter; and the company’s worsening performance against its peers.
In Q3, Starbucks’ comparable store sales in the U.S. fell 2%. Seeking Alpha analyst Gary Alexander argued that the drop fares particularly badly when compared to competitors like Dutch Bros and Luckin Coffee.
“Luckin is already a threat to Starbucks in China, where Starbucks’ segment comp sales grew only 2%, paling in comparison to Luckin’s much more aggressive 13.4% comps growth,” the analyst said. Meanwhile, Dutch Bros witnessed a 6.1% growth in its Q2 same-shop sales.
In September, Starbucks said it would start offering healthier options and protein-infused beverages to “tap into the growing consumer demand for protein in an innovative, premium and delicious way.”
However, SA analyst Skeptical12 believes that this decision alone is not enough to address its root issues.
“While protein drinks are increasingly popular in the US and China, simply adding these kinds of coffee-based products does not address the root cause of Starbucks’ continual structural issues. The company is simply not offering enough value to customers for most to continue to come into the stores and purchase the company’s products,” he said.
Analysts also believe that investors will look out for the management’s potential comments about store closures and openings.
“In Q4, we should be very watchful for what the company says about its future plans, if any, to return its U.S. store portfolio back into a growth position, and if the company has any new insights on where it plans to place new stores to replace recent closures,” Gary Alexander said.
Over the last 2 years, SBUX has beaten EPS and revenue estimates 25% of the time. Over the last 3 months, EPS estimates have seen 1 upward revision and 26 downward moves while revenue estimates have seen 3 upward revisions and 21 downward adjustments.
On a YTD basis, Starbucks’ shares have fallen by 5% while in the past year it has declined 11% compared to a nearly 17% rise in the S&P500 index.