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During the earnings season for US stocks, mines are exposed from time to time.Playtoearnnftgame! Now it's Starbucks' turn.
On May 1, local time, Starbucks shares collapsed, falling nearly 18% at one point! By the close, Starbucks was down 15%.Playtoearnnftgame.88%, the share price closed at $74.44, with a total market capitalization of $84.318 billion, wiping out $15.915 billion (115 billion yuan) overnight.
Starbucks shares fell sharply in connection with its latest financial results. According to its latest second-quarter results, Starbucks' revenue and earnings per share are lower than market expectations. In particular, same-store sales fell 4 per cent year-on-year, the first decline since 2020, compared with market expectations of a 1.46 per cent rise. Separately, Starbucks cut its full-year revenue growth forecast to low digits and hinted that adjusted earnings per share could be flat.
Some analysts pointed out that Starbucks' results for the quarter may be the worst of any big company so far. Subsequently, JPMorgan lowered the target price of Starbucks to $92 from $100, and Deutsche Bank downgraded Starbucks to hold. Investment bank William Blair also downgraded Starbucks' stock recommendation rating.
Starbucks performance "thunderstorm"
Sales in China have plummeted.
On the morning of May 1, Beijing time, Starbucks disclosed its second-quarter results. According to the data, Starbucks' operating income for the quarter was $8.56 billion, down 2% from a year earlier, below market expectations of $9.13 billion; net profit was $772 million, down 14.96% from a year earlier; and adjusted earnings per share was $0.68, below market expectations of $0.79.
Starbucks' same-store sales figures are much lower than market expectations. Specifically, the company's same-store sales fell 4% in the quarter from a year earlier, falling for the first time since 2020, and the market is expected to rise by 1.46%. Among them, US store sales fell 3% year-on-year, the market is expected to rise 2.31%, Chinese store sales fell 11% year-on-year, the market is expected to decline 1.64%.
Although Starbucks' average spending increased by 2% in the quarter, the number of customers in cafes fell by 6%. To boost sales, Starbucks has tried a series of new strategies, including afternoon promotions and the launch of new products such as lavender lattes, but the results show that these measures have not significantly improved performance.
In view of these challenges, Starbucks has revised its growth forecast for 2024 for the third time. The company now expects global revenue growth to be in the low single digits, well below its previous forecast range of 7% to 10%. At the same time, global and US same-store sales are expected to decline in low single digits or flat. In addition, it lowered its expectations for same-store sales in China and store growth around the world.
Laxman Narasimhan, the company's chief executive, called it "a challenging environment" and pointed to macroeconomic resistance and pressure on consumers as the main challenges. In the more than a year since Laxman Narasimhan took office, the company has repeatedly downgraded its performance guidance, and the results further highlight the grim reality that Starbucks faces the retreat of consumers.
Rachel Ruggeri, chief financial officer of Starbucks, said the colder-than-usual weather in January affected store visits across the industry, coupled with more savings among global consumers and conflicts in the Middle East, which affected quarterly results. He said Starbucks was not satisfied with the quarter's performance, the company will be more focused, and its way forward is very clear. He added that the company was trying to reverse the decline by focusing on meeting morning demand. Starbucks hopes to increase the supply of products and shorten waiting times, including updating the way some drinks are produced. It is developing new products to attract afternoon customers and will launch Boba-like drinks this summer.
"A shocking all-round mistake"
Wall Street downgraded Starbucks
After Starbucks announced its results, Wall Street analysts downgraded and rated Starbucks.
Adam Crisafulli, an analyst at Vital Knowledge, said in a report that Starbucks' results for the quarter were probably the worst of any large company so far.
Deutsche Bank analyst Lauren Silberman downgraded Starbucks to hold from a buy rating with a target price of $89. Sharon Zackfia, an analyst at William Blair, an investment bank, also downgraded Starbucks' stock recommendation rating from "outperforming" to "in line with the market" on the grounds that the coffee chain had made shocking overall mistakes in all key indicators.
In addition, JPMorgan lowered Starbucks' target price to $92 from $100, while Deutsche Bank downgraded Starbucks to hold, with a target price of $89.
'This is an obvious mistake and there is no simple solution yet, 'said Andy Barish, an equity analyst at Jefferies, commenting on Starbucks' latest results. "the question for the company and investors is whether these challenges are temporary issues of brand, relevance and competitiveness, or longer-term issues, especially in China."
Got rolled up by "$9.9"?
CEO: will further expand the sinking market
According to reference sources, Luckin Coffee has replaced Starbucks as the "number one coffee" in the Chinese market, and its total sales in the Chinese market have surpassed Starbucks in 2023. Luckin Coffee's sales have increased significantly and surpassed Starbucks, mainly due to rapid exhibition stores, low-price strategy and innovative marketing.
In March this year, Starbucks founder and honorary chairman of the board of directors Howard Schultz visited China. During the event, he talked about his views on the Chinese market and fierce competition. Schultz revealed that competition is making coffee known to millions of people. But the company is not engaged in a discount war or price war, Starbucks is based on the community, with high-quality coffee to create human connections, to form an "experiential coffee brand."
At the same time, Schultz says that over time, as customers learn more about coffee, they will want to upgrade from low-end or discounted products. Howard Schultz said: "as long as we continue to win the respect of the market, they will choose to upgrade to Starbucks." I am very confident that Starbucks will continue to be the market leader over time. "
然而他的话音刚落，“9块9的风终于还是卷到了星巴克”就登上了话题热搜。诸如“满70元减15元”“55.9元三杯”、“45.9元两杯”各种优惠券也纷纷出现。
对此，星巴克中国董事长和CEO王静瑛解释称，客单价降低的主要原因在于星巴克中国为提升消费者购买频次而推出的个性化的优惠促销活动。“这使我们能够优化销售额和利润。”这意味着，“以价换量”已逐渐成为星巴克在中国市场的现实。
星巴克将继续落实中国战略的三个关键要素：提供更多本地相关的咖啡创新产品；加码重大技术投资，提高全渠道能力，数字化赋能门店；鉴于下沉市场强劲的新门店经济效益，进一步在下沉市场，尤其是新的县级城市拓展新店。“我坚信中国市场充满无限机遇，星巴克对在中国市场的长期发展充满信心。”Narasimhan表示。
来源：星巴克财报、券商中国、参考消息、北青报、公开资料等
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