With weak US demand and continued pressure in China, it may be difficult for Starbucks (SBUX) to report earnings in pounds.
Overall, sales are expected to increase 10.2% year over year to $9.6 billion, and adjusted profit is expected to increase 22.5% to $0.93.
In the U.S., same-store sales are expected to increase 5.73% year over year while foot traffic remains relatively flat and check size increases 4.58%.
Many analysts cited the decline in foot traffic as a contributing factor to union strikes.
“After a strong start in October, we believe domestic sales have been more volatile in November and December,” William Blair analyst Sharon Zakfir said in a note to clients. “Including the noise surrounding the pre-Thanksgiving union strike and calls for a boycott of Starbucks on social media,” he said. Israel/Hamas war from both pro-Palestinian and pro-Israeli sides. ”
In a mid-December internal memo, Starbucks' CEO expressed concern about current events and the spread of misinformation about the company.
“U.S. visitation trends are softening,” Stifel analyst Chris Okal said in a note to clients, driven by tailwinds such as ticket growth, customization, pricing and food ordering. However, he said the recent winter storms likely affected sales.
Wedbush analyst Nick Seitan echoed similar sentiments, saying that the trend for premium beverages, customized beverages, and added-to-order foods is “in an environment where customers are focused on managing their checks and are less likely to remain contributors.” He said the team's “increasing concerns” that there may not be. ”
Citi analyst John Tower wrote that “some of the bearish arguments are becoming harder to disprove,” including the macro environment impact, premium price points and reputational damage from the protests. I am also interested in what will happen to the incentives for bringing your own cup.
Another important area of focus for Starbucks is international. Earlier this month, the company announced plans to open 1,000 stores in India.
China, the second-largest market, is a top concern for investors. He aims to expand the number of stores in the country to 9,000 by the end of 2025, and by 2030 he has an even more ambitious goal of reaching 55,000 stores.
Overall, international sales are expected to increase 11.6% year over year, driven by 16% sales growth in China. International passenger numbers he is expected to increase by 7.84%, and ticket size will also increase slightly, increasing by 2.45%.
Zakfir called China a “wild card” because its sales compare to last year, when stricter coronavirus restrictions were still in place. She sees “high levels of exposure” in the US and China as a risk.
Okal said there is also competition there from local brands like Luckin Coffee and Kotti Coffee, which are very aggressive with their pricing strategies.
“Investors will be looking for signs that Starbucks China may be losing market share,” he said.
2024 will be a key year for Starbucks to regain its footing. Following its fourth quarter results in November, the company announced plans to implement a $3 billion efficiency program over the next three years, of which Starbucks claims $2 billion will be saved to the company. .
The government also aims to double the hourly wage of workers by fiscal 2025 compared to fiscal 2020.
The stock is down about 7% over the past six months and 14% year-over-year, compared to a 21% rise in the S&P 500 index (^GSPC). Meanwhile, shares of McDonald's (MCD), which just announced its expansion into the coffee scene with CosMc, have risen about 7.3% over the past year.
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Brooke DiPalma is a senior reporter at Yahoo Finance. Follow her on Twitter @brooke di palma Or email bdipalma@yahoofinance.com.
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