Starbucks beats Q4 profit estimates; sees FY sales drop on China operations transition

Overview

• Coffeehouse chain's fiscal Q4 revenue fell 4%, missing analyst expectations

• Adjusted EPS for fiscal Q4 rose 54%, beating analyst expectations

• Company closed about 250 North America stores in Q4 as part of restructuring

Outlook

• Starbucks sees FY27 consolidated net revenues declining about 1% y/y, including 53rd week, due to transition of China's retail operations

• Company expects FY27 North America comparable coffeehouse sales growth of about 4%

• Starbucks forecasts FY27 non-GAAP EPS of $3.15 to $3.25, including over $0.10 from the 53rd week

Result Drivers

• CHINA TRANSACTION - Co said Q4 revenue decline was primarily due to conversion of Starbucks retail operations in China to a licensed joint venture model

• HIGHER AVERAGE TICKET - Co said Q4 global comparable coffeehouse sales rose 7.2%, mainly due to a 5.2% increase in average ticket

• LOWER RESTRUCTURING COSTS - Co said Q4 operating margin expanded mainly due to lower restructuring costs and sales leverage

Company press release:

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "hold" and the breakdown of recommendations is 15 "strong buy" or "buy", 20 "hold" and 4 "sell" or "strong sell"

• The average consensus recommendation for the restaurants & bars peer group is "buy."

• Wall Street's median 12-month price target for Starbucks Corp is $110.50, about 7.1% above its October 28 closing price of $103.20

• The stock recently traded at 33 times the next 12-month earnings vs. a P/E of 36 three months ago

Reuters Recommended Reads

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(This story was created using Reuters automation and AI based on LSEG and company data. It was checked and edited by a Reuters journalist prior to publication.)