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Starbucks’ shares soar as Q3 results beat estimates

Starbucks (NASDAQ: SBUX) topped market expectations for revenue and earnings in the third quarter of 2019 and raised its full-year guidance, sending the stock soaring 5.6% in aftermarket hours on Thursday.  

Consolidated revenues of $6.8 billion was up 8% from the same period last year, and ahead of estimates of $6.6 billion.

Starbucks beat market estimates for Q3 2019 and raises full-year guidance

On a GAAP basis, net earnings attributable to Starbucks rose 61% year-over-year to $1.3 billion while EPS grew 84% to $1.12. Adjusted EPS grew 26% to $0.78, beating forecasts of $0.72.  

Global comparable store sales increased 6%, driven by a 3% increase in average ticket and a 3% increase in comparable transactions. US comp sales grew 7% while China comp sales rose 6%.  

Net revenues in the Americas segment grew 11% year-over-year to $4.7 billion, mainly driven by 7% growth in comparable store sales and 4% store growth. In the China/Asia Pacific segment, revenues grew 9% to $1.3 billion, helped by 12% store growth, and a 5% increase in comparable store sales.

Net revenues for the EMEA segment fell 11% to $231.7 million due to the conversion of the France and Netherlands retail businesses to fully licensed operations as well as the closure of certain company-operated stores. Revenues in the Channel Development segment dropped 6% to $533.3 million, mainly due to licensing the CPG and foodservice businesses to Nestle.

The company opened 442 net new stores, yielding 30,626 stores at the end of the quarter, a 7% increase from last year. Around one-third of net new store openings were in China and 48% were in other international markets. The company expects to open approx. 2,000 net new Starbucks stores globally during fiscal year 2019.

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For fiscal year 2019, Starbucks expects revenue growth of around 7% with global comparable store sales growth of about 4%. The company raised its earnings guidance and now expects GAAP EPS to be $2.86 to $2.88 and adjusted EPS to be $2.80 to $2.82. This compares to the previous outlook ranges for GAAP EPS of $2.40-2.44 and adjusted EPS of $2.75-2.79.

Starbucks declared a cash dividend of $0.36 per share, payable on August 23, 2019, to shareholders of record as of August 8, 2019.

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