This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Starbucks (SBUX) Serves Up Lukewarm First Quarter

NEW YORK (TheStreet) -- Starbucks (SBUX - Get Report) was under pressure to overdeliver in its first quarterly report of 2014, as investors had high hopes it could buck the low-traffic trends plaguing retail and restaurant chains. While revenue missed expectations and U.S. same-store sales weren't as strong as desired, there's still a lot to savor in the coffee chain's December-ended quarter.

For the first-quarter ended Dec. 29, the coffee chain reported $4.24 billion in revenue, 12% higher than the year-ago quarter. However, those numbers missed Thomson Reuters estimates by $54 million. Net income experienced a 25% year-over-year increase, as Starbucks earned 71 cents a share, beating consensus estimates by 2 cents.

"Starbucks strong Q1 results once again demonstrate the fundamental strength of the Starbucks business, particularly noteworthy given the continued economic challenges worldwide," said CFO Troy Alstead in a statement.

Global same-store sales growth of 5% fell within the company's guidance range for a mid-single-digit increase, but failed to reach analysts' expectations of a 5.9% increase. Comparable-store sales in the Americas and U.S. jumped 5%, though fell short of the 6.4% growth anticipated by estimates provider Consensus Metrix.

Must Read: Why Tesla (TSLA) Is Up Today

While sales on home turf failed to impress, the coffee giant exceeded expectations overseas. Comparable sales in Europe, the Middle East and Africa increased 5%, its highest growth in 13 quarters, and significantly higher than analyst consensus of 2%. Meanwhile, China and the Asia-Pacific saw comp growth of 8% compared to an expected 7.7% increase.

"Holiday 2013 was the first in which many traditional brick-and-mortar retailers experienced in-store foot traffic give way to online shopping in a major way," said CEO Howard Schultz in a statement. "As our solid traffic growth and record Q1 results demonstrate, Starbucks unique combination of physical and digital assets positions us as one of the very few consumer brands with a national and global footprint to benefit from the seismic shift underway."

An indication it's embracing the digital consumer, the Seattle-based business said dollars loaded on Starbucks Cards globally reached $1.4 billion in the quarter. While the company doesn't book the revenue available on cards until it is spent in-store, the guaranteed future income stream looks promising. Through the program's lifespan, more than $16 billion has been loaded onto 450 million cards at Starbucks in 27 different countries.

Card-owners won't be hard-pressed to find a physical location at which to spend their digital dollars. Over the quarter, the company opened 417 new stores globally, bringing the total store count to 20,184.

In extended trading, shares climbed 1.3% to $74.34.

TheStreet Ratings team rates STARBUCKS CORP as a Hold with a ratings score of C+. The team has this to say about their recommendation:

"We rate STARBUCKS CORP (SBUX) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins."

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
SBUX $56.23 0.00%
AAPL $93.74 0.00%
FB $117.58 0.00%
GOOG $693.01 0.00%
TSLA $240.76 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs