Starbucks Strives for Comeback in Q1 Earnings Report
Key Metrics to Watch:
* Revenue: $9.32 billion (est.) vs. $9.43 billion (Q1 FY24)
* Adjusted EPS: $0.66 (est.) vs. $0.75 (Q1 FY24)
* Same-Store Sales: -5.30% (est.) vs. 5.00% (Q1 FY24)
* Foot Traffic: -7.28% (est.) vs. 2.0% (Q1 FY24)
* Ticket Growth: 1.87% (est.) vs. 3.00% (Q1 FY24)
Wall Street Outlook:
Wall Street anticipates ongoing negative same-store sales trends, with declines in both US and International markets. However, analysts remain optimistic about the company's potential for improvement.
Operational Changes:
As part of CEO Brian Niccol's "Back to Starbucks" plan, the company has implemented several changes to enhance its customer experience, including:
* Eliminating extra charges for non-dairy milk
* Reintroducing ceramic mugs
* Enforcing a Coffeehouse Code of Conduct
Cost and Investment Considerations:
Analysts note that rising coffee costs may impact Starbucks' margins but are mitigating this risk through fixed price contracts. Additionally, the company plans to announce corporate layoffs to improve operational efficiency.
Analyst Expectations:
Analysts will closely monitor Starbucks' investments and sources of revenue reinvention during the earnings call. They expect specific details on the magnitude and allocation of investments.
Bullish Sentiment:
While Starbucks stock has underperformed the S&P 500 in the past year, its shares have gained significantly in the past six months following Niccol's appointment. Analysts believe there is an opportunity for a brand turnaround, citing the positive performance of US same-store sales growth compared to last quarter.
Cautionary Note:
Despite the bullish outlook, analysts caution that the slow trajectory of Starbucks' sales and earnings growth compared to previous years may temper investor enthusiasm.