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Coffeehouse chain Starbucks (NASDAQ:SBUX) missed analysts' expectations in Q2 CY2024, with revenue flat year on year at $9.11 billion. It made a non-GAAP profit of $0.93 per share, down from its profit of $1.00 per share in the same quarter last year.
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Starbucks (SBUX) Q2 CY2024 Highlights:
- Revenue: $9.11 billion vs analyst estimates of $9.25 billion (1.5% miss)
- Operating income: $1.52 billion vs analyst estimates of $1.51 billion (slight beat)
- EPS (non-GAAP): $0.93 vs analyst expectations of $0.93 (in line)
- Gross Margin (GAAP): 27.9%, down from 28.4% in the same quarter last year
- Free Cash Flow of $2.58 billion is up from -$153.1 million in the previous quarter
- Locations: 39,477 at quarter end, up from 37,222 in the same quarter last year
- Same-Store Sales fell 3% year on year (10% in the same quarter last year) (slight miss)
- Market Capitalization: $85.18 billion
Started by three friends in Seattle’s historic Pike Place Market, Starbucks (NASDAQ:SBUX) is a globally-renowned coffeehouse chain that offers a wide selection of high-quality coffee, beverages, and food items.
Traditional Fast FoodTraditional fast-food restaurants are renowned for their speed and convenience, boasting menus filled with familiar and budget-friendly items. Their reputations for on-the-go consumption make them favored destinations for individuals and families needing a quick meal. This class of restaurants, however, is fighting the perception that their meals are unhealthy and made with inferior ingredients, a battle that's especially relevant today given the consumers increasing focus on health and wellness.
Sales GrowthStarbucks is one of the most widely recognized restaurant chains in the world and benefits from brand equity, giving it customer loyalty and more influence over purchasing decisions.
As you can see below, the company's annualized revenue growth rate of 7% over the last five years was mediocre, but to its credit, it opened new restaurants and grew sales at existing, established dining locations.
This quarter, Starbucks missed Wall Street's estimates and reported a rather uninspiring 0.6% year-on-year revenue decline, generating $9.11 billion in revenue. Looking ahead, Wall Street expects sales to grow 7% over the next 12 months, an acceleration from this quarter.
Same-Store SalesStarbucks's demand within its existing restaurants has generally risen over the last two years but lagged behind the broader sector. On average, the company's same-store sales have grown by 4.9% year on year. With positive same-store sales growth amid an increasing number of restaurants, Starbucks is reaching more diners and growing sales.
In the latest quarter, Starbucks's same-store sales fell 3% year on year. This decline was a reversal from the 10% year-on-year increase it posted 12 months ago. We'll be keeping a close eye on the company to see if this turns into a longer-term trend.
Key Takeaways from Starbucks's Q2 Results Same-store sales missed slightly, leading to a revenue miss. However, operating margin was better, leading to an operating income beat. Guidance will be given on the earnings call, which could further move the stock. The stock traded up 1.3% to $76.93 immediately following the results.
