Starbucks’ (SBUX) “Back to Starbucks” strategy to revive traffic and lift comparable-store sales showed further progress in the fiscal fourth quarter, with the company delivering positive growth across all segments and outperforming expectations for another quarter of negative comps.
In North America, comparable store sales were flat beating estimates for a decline of 0.53%, up 3% internationally versus +1.75% estimates, and up 2% in China, slightly below +2.16% estimates and unchanged from the previous quarter despite intense competitive from Luckin Coffee. Company-wide, comparable store sales were up 1%, the first positive growth in seven quarters, beating the consensus estimate for a decline of 0.48%.
The better-than-expected comp stores sales helped offset mixed financial results. The company earned an adjusted profit of $0.52 per share, down 35% year-over-year and 3 cents below expectations. Increased restructuring costs associated with the closure of coffeehouses and investments in the Back to Starbucks initiative weighed on profitability, compressing operating margins by 510 basis points to 9.9% vs 10.2% estimates.
Revenue, however, increased 5% to $9.6B, exceeding expectations by $250M.
“We’re a year into our ‘Back to Starbucks’ strategy, and it’s clear that our turnaround is taking hold,” said Starbucks CEO Brian Niccol. “Our return to global comp growth and the momentum we’re building give me confidence we’re on the right path to deliver the very best of Starbucks for our customers, partners and shareholders.”
The results lifted shares in after-hours trading, up by nearly 2%.