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Starbucks' earnings estimates are highest as U.S. and China gross sales get well sooner than anticipated

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Starbucks reported Thursday that US and China sales are recovering faster than expected from the coronavirus pandemic, and global sales in the same store are only shrinking 9%.

The global coffee chain's sales were boosted by customers spending more on their cold brew and frappuccinos pumpkin cream, although foot traffic remains low. The company's outlook for fiscal 2021 assumes a faster recovery than analysts expected.

Shares in the stock initially rose after the report, but are now down around 1%.

The company reported, relative to Wall Street expectations based on an analyst survey by Refinitiv:

  • Earnings per share: 51 cents, adjusted compared to 31 cents expected
  • Revenue: $ 6.2 billion versus $ 6.06 billion expected

Starbucks reported net income of $ 392.6 million, or 33 cents per share, for the fourth quarter, compared to $ 802.9 million, or 67 cents per share, a year earlier.

Excluding articles, the coffee chain earned 51 cents per share, exceeding the analysts surveyed by Refinitiv, 31 cents per share.

Net sales decreased 8% to $ 6.2 billion, beating expectations of $ 6.06 billion. The company estimates it lost $ 1.2 billion in sales due to the coronavirus pandemic. Global sales in the same store decreased 9%.

While the number of transactions has decreased, customers are spending more on their coffee orders. Executives said customers are buying more cold drinks and herbal options, both of which tend to be more expensive and upsizing because customers are self-treating.

In the US, sales in the same store were down 9%. Active membership in Starbucks' U.S. loyalty program increased 10% to 19.3 million people and generated 47% of transactions. Demand improved during the quarter. In September, sales in the same store in the U.S. were only 4% lower, aided by the return of Pumpkin Spice Lattes.

Coffee competitor Dunkin 'reported sales growth in the US of 0.9% in the previous quarter on Thursday. Although the chain has thousands fewer cafes than Starbucks, it has benefited from a higher concentration of thoroughfares and more bulk orders from customers. Dunkin & # 39; is in the sales pitch with Inspire Brands.

In China, Starbucks' second-largest market, the coffee chain's sales in the same store fell just 3%.

Starbucks opened 480 new Netto cafes in the quarter. 1,100 new net stores and investments of $ 1.9 billion are expected in the next fiscal year.

Starbucks expects to make between $ 2.70 and $ 2.90 per share in fiscal 2021 after adjustments on revenue of $ 28 billion to $ 29 billion.

Worldwide sales in the same store are expected to grow 18% to 23% for the year, with sales in the same store in the US expected to grow 17% to 22%. The forecast assumes that US dining rooms will be fully reopened by the end of the second fiscal quarter, when sales in the same store are also expected to recover. China's sales growth in the same business is expected to reach 27% to 32%.

For the first quarter of the fiscal year, the company is forecasting adjusted earnings of 50 cents to 55 cents per share.

The company's board of directors increased the dividend to 45 cents. While many companies decided to suspend their dividends at the start of the lockdown, Starbucks continued to pay them out to shareholders.

Read the full results report here.

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Steven Gregory