Starbucks Corporation (NASDAQ: SBUX) stock fell over 8.4% on July 28th, 2017 (as of 11:57AM EDT; Source: Google finance) post their disappointing earnings update. Moreover, they said that they would be facing ongoing macro pressures which would hurt their retail and restaurant sectors leading to a more cautious outlook in the fourth quarter of 2017.
GAAP operating margin fell 110 basis points to 18.4% in the third quarter of 2017 as compared to the same quarter last year, inclusive of impairments. GAAP EPS lost 8% yoy to $0.47 per share.
On the other hand, the group’s Global comparable store sales rose 4% on a yoy basis in the third quarter of 2017 while their Americas comp store sales rose 5% yoy. U.S. comp store sales rose 5% yoy boosted by rising in average ticket wherein the average ticket rose 4% and transactions grew 1% after adjusting for the estimated impact of order consolidation post the shift in the Starbucks Rewards™ loyalty program from a frequency-based to spend-based model in third quarter of FY16
China comp store sales rose 7% yoy on the back of 5% rise in transactions. Moreover, Starbucks announces agreed to buy the rest of 50% of their East China JV while divesting their 50% interest in their Taiwan JV. Starbucks has over 2,800 stores in 130 cities, while this acquisition, and would lead to over 1,300 Starbucks stores in 25 cities in the Shanghai, Jiangsu and Zhejiang Provinces. They expect to enhance their presence to 5,000 Stores in Mainland China by 2021
Starbucks Corporation opened 575 net new stores globally, leading to a total store count to 26,736 across 75 countries while their Rewards membership rose 8% yoy, to 13.3 million active members. Mobile Payment rose to 30% of transactions in U.S. while Mobile Order and Pay enhanced to 9% of transactions in U.S. company-operated stores. Starbucks bought back 3.5 million shares of common stock in the third quarter of FY17, while reported a cash dividend of $0.25 per share.
But, Net revenues for the EMEA segment lost 9% yoy to $249.9 million in the third quarter of FY17, due to the absence of revenue related to the sale of their Germany retail operations in Q3 FY16 as part of the ongoing shift to more licensed stores in the region.