Coffee stock under pressure: Starbucks Corporation (NASDAQ: SBUX)

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Starbucks Corporation (NASDAQ: SBUX) stock fell 2.9% on 29th January, 2020 (as of 12:40 pm GMT-5; Source: Google finance) post the first quarter of FY 20 despite China’s comparable store sales rose 3 percent. Starbucks has posted a 15% growth in revenues from its China operations during the first quarter that ended Dec. 29, 2019. However, the company has closed more than half of its stores in China and continue to monitor and modify the operating hours of all of the stores in the market due to the outbreak of the coronavirus. This is anticipated to be temporary. Due to the dynamic nature of these circumstances, the duration of business disruption, reduced customer traffic and related financial impact cannot be reasonably estimated at this time but are anticipated to significantly affect the International segment and consolidated results for the second quarter and full year of fiscal 2020.

Starbucks Coffee

SBUX in the first quarter of FY 20 has reported the adjusted earnings per share of 79 cents, beating the analysts’ estimates for the adjusted earnings per share of 76 cents, according to figures compiled by Thomson Reuters. The company had reported the adjusted revenue growth of 7.1 percent to $7.10 billion in the first quarter of FY 20, beating the analysts’ estimates for revenue of $2.47 billion. The company has expanded its GAAP operating margin by 190 basis points year-over-year to 17.2%, mainly due to sales leverage, supply chain efficiencies and lower restructuring and impairment charges, which was partially offset by growth in wages and benefits, as well as investments in store labor hours.

Additionally, the company had repurchased 13 million shares of common stock in the first quarter fiscal 2020. Approximately 16.2 million shares is currently available for purchase under the current authorization. The company has declared a cash dividend of $0.41 per share, which is payable on February 21, 2020, to shareholders of record as of February 6, 2020.

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