Starbucks FQ1: Comp sales below estimates but margins impress

Starbucks (SBUX) reports same-store sales rose 5.0% during FQ1 in the Americas to fall short the consensus estimate calling for a 6.25% gain, but fall within the company's guidance range for mid single-digit growth.

Global comparable-store sales rose 5.0% during the quarter vs. 5.7% consensus. Traffic was up 4%, while ticket prices rose 1% across all geographic segments.

Operating margin rose 260 bps Q/Q to 19.2%, compared to Starbucks' 2014 guidance for a range of 19.1% to 19.6%.

The company opened 417 net new stores during the quarter to reach a total store count of 20,184.

SBUX -1.4% AH

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Comments (2)
  • Twest
    , contributor
    Comments (139) | Send Message
    Did everyone notice that coffee prices fell more than 50% in 2013? SBUX margins lifted nicely to 19.2% but only by 2.6% - this does not bode well for SBUX. Their margins should be skyrocketing this past year versus 2012. Clearly the price of coffee futures has little to do with the profits at Starbux. Shocking. Labor and overhead clearly have more to do with profits than does the price of the main ingredient they sell: coffee. Also, did anyone notice that sugar prices were down big last year too? It was the best of all possible worlds scenario for SBUX. Wages are flat, costs are down HUGE and their margins are roughly 20%. Hmmm. Odd. Time to dig deep into their financials to see where there costs are.
    23 Jan 2014, 11:40 PM Reply Like
  • Welt
    , contributor
    Comments (265) | Send Message
    Starbucks does not pay anywhere near spot price for their coffee. They pay enough to keep their farmers above water which is much much higher. This allows them to keep their supply consistent and to provide us with coffee from premium fair trade beans.


    If my calcs are correct, coffee traded between roughly $1.6-2.5 per lb in 2012 yet SBUX paid an average of $2.56 per lb that year.




    Not sure about sugar though.


    24 Jan 2014, 11:50 AM Reply Like
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