Another quarter, another proof positive that coffee never goes stale at Starbucks.
The coffee giant met Wall Street expectations when it posted results for the fiscal fourth quarter, posting EPS of $0.43. And though just meeting results, along with a slight miss in current quarter projections, may not have been much to write home about — indeed, shares sank a bit after hours — a deeper dive into the numbers and trends showed some traction, especially on the digital side of the business.
[bctt tweet=”Starbucks growth trends showed some traction, especially on the digital side of the business.”]
Profits were up roughly 11 percent in the quarter, driven by global same-store sales that were up 8 percent. That marks almost two dozen straight quarters of better than 5 percent same-store growth. The latest global sales comp figures were better than the 7 percent The Street had expected, with particular strength in the United States, where similar metrics showed 9 percent growth. That jump managed to offset a relatively paltry 6 percent boost in the Asia Pacific region.
For the current quarter, which includes, of course, several holidays, the earnings per share range was given as $0.44 to $0.45, below the $0.47 posted by consensus. Part of that miss is explained by currency impacts, part of it by continued efforts to keep talent in place and part of it to keep investing in technology.
And it is the latter two initiatives — at a push of more than $100 million to $125 million in the current fiscal year, on top of the $145 million spent last year — that will hit margins, at least temporarily, an admission that was enough to send shares down about 2 percent after hours. However, full year guidance on the bottom line remains in tune with consensus at $1.87 to $1.89, bracketing consensus at $1.88. That suggests some snapback in leverage even as investments continue.
But technology, and its attendant improvements in traffic (which was up 4 percent in the latest quarter) and the user experience, may offer the key to continued growth as mobile users overall were up 32 percent year on year in the latest quarter across the United States and Canada. Since Starbucks introduced its mobile ordering (known as Mobile Order & Pay) in the last month here in the U.S., mobile ordering and payments has spread quickly, recently accounting for more than 20 percent of transactions in the U.S. in October, with increased spend per ticket, management said on its call with investors and analysts to discuss the earnings. And now, executives said, Starbucks sits “at the intersection” between the physical and digital worlds, with marked improvement in traffic and lines that typically have snarled smooth operations during peak times. The mobile platform now is live in all U.S. locations, along with several hundred locations in the United Kingdom and in Canada.
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