Starbucks on Tuesday reported that its U.S. same-store sales fell 5% during its fiscal first quarter after a surge of new Covid-19 cases led to harsher dining restrictions.
The company also announced that COO Roz Brewer will be leaving Starbucks at the end of February. People familiar with the matter told CNBC later Tuesday that she will become chief executive of Walgreens. Her responsibilities will be split among other members of Starbucks’ existing leadership team.
Shares fell about 1% in extended trading.
Here’s what the company reported for the quarter ended Dec. 27 compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:
- Earnings per share: 61 cents, adjusted, vs. 55 cents expected
- Revenue: $6.75 billion vs. $6.93 billion expected
The company reported fiscal first-quarter net income of $622.2 million, or 53 cents per share, down from $885.7 million, or 74 cents per share, a year earlier.
Excluding items, the coffee giant earned 61 cents per share, topping the 55 cents per share expected by analysts surveyed by Refinitiv.
Net sales dropped 5% to $6.75 billion, falling short of expectations of $6.93 billion. Worldwide, same-store sales fell 5%. The company saw 19% fewer transactions during the quarter, but the average ticket jumped 17%.
In the U.S., same-store sales fell by 5%. The company’s recovery in its home market was hampered by another surge in Covid-19 cases as the temperatures grew colder. Same-store sales fell just 3% in October but slid to 8% by December.
On the bright side, the number of Starbucks Rewards members who have been active in the last 90 days rose 15% to 21.8 million people. Mobile orders represented a quarter of transactions, up from 17% before the crisis.
CEO Kevin Johnson said the company had a “very strong” holiday season. Starbucks gift card activations exceeded the company’s projections. He called the Irish Cream Cold Brew a “new holiday favorite.” The drink was unveiled in 2019 and follows the success of the Pumpkin Cream Cold Brew, which overtook the Pumpkin Spice Latte as the bestselling drink on the fall menu.
In China, Starbucks’ second-largest market, same-store sales turned positive for the first time since the health crisis started. Its same-store sales rose 5%, although transactions still declined compared with the same time a year ago.
The company opened 278 net new cafes during the quarter and now has a footprint nearing 33,000 locations.
Next quarter, Starbucks is forecasting U.S. same-store sales growth of 5% to 10%. January same-store sales are expected to turn positive after December’s downward slide, according to executives. In China, same-store sales are expected to nearly double. The company expects to earn 36 cents to 41 cents per share. It’s projecting earnings per share of 45 cents to 50 cents on an adjusted basis.
The company also raised its outlook for its fiscal 2021 earnings. It now expects earnings per share between $2.42 and $2.62, up from its prior forecast of $2.34 to $2.54.
CFO Pat Grismer said that Starbucks will be issuing a comprehensive update on its outlook for the fiscal year when it reports next quarter’s earnings. He cited the volatility stemming from the pandemic.