- Starbucks reported fiscal fourth quarter results that came in better than expected.
- While revenue and comps were still negative, other metrics signal a clear rebound from April.
- CEO Kevin Johnson said the recovery is happening faster than expected.
Coffee giant Starbucks Corporation (NASDAQ: SBUX) reported Thursday afternoon fiscal fourth quarter results that signal the company’s recovery from COVID-19 lows is unfolding “faster than we anticipated,” CEO Kevin Johnson told Bloomberg TV.
Rebound from lows
Starbucks reported a solid EPS beat of 51 cents versus estimates of 31 cents while revenue of $6.2 billion was better than the $6.06 billion expected. Net income fell from $802.9 million last year to $392.6 million and the company said it believes it missed out on $1.2 billion worth of sales because of the pandemic.
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Here is a full recap of Starbucks’ fiscal fourth quarter report.
While revenue was still lower by 8% year-over-year and global same-store sales were down 9% in the reported quarter, the CEO touted other metrics that show a rebound is underway.
For example, Johnson explained that the U.S. business in April was showing a negative 65% comp rate. Fast forward to September and U.S. comps were down just 4% year-over-year despite 3% of stores remaining closed across the country.
China also signaled a quick rebound from its lows as 90% of its stores in the country were shut down in February. Fast forward to September and the China business is not only showing a positive year-over-year comp but management is confident enough to continue opening hundreds of new stores.
The recovery has been fueled by management’s new mission purpose of providing a “safe, familiar, and convenient,” the CEO said.
Customers want to come back
Starbucks has invested heavily in digital initiatives over the years such as mobile ordering and curbside pickup, the CEO said. But the consumer will always want to visit a Starbucks store for the familiar in-house experience.
So far, around 60% of all Starbucks stores are open for dine-in at some capacity.
“As soon as we open limited seating, customers are back sitting in our stores,” Johnson said. “We do it where they socially distance.”
Starbucks’ management said in its Thursday report that it expects to fully recover from the pandemic-induced woes in 2021. This begs the question if management’s guidance requires an improving position from a health perspective and no further restaurant shutdowns.
Encouragingly, the early months of Starbucks’ recovery succeeded despite rising infection rates in many parts of the U.S., the CEO said.
“We know how to operate in the world of COVID, even before there is a vaccine and therapeutics,” he said. “Certainly we look for that day where there is a vaccine and therapeutics because once that happens, then we think there is a huge wave of demand.”