Even though the global coffee chain Starbucks Corp raised its annual forecast for revenues as well as profits based on its assumption that the vaccine roll out program across the world will help many consumers to return to its stores, there was 2 per cent drop in the shares of the company as it missed quarterly sales estimates.
Weak performance in the company’s international business, where the Covid-19 pandemic has forced governments to restrict travel and shut down cafes albeit temporarily, hit its global comparable sales.
Despite this, its revenue forecast for the entire of the current year was raised by the company – now expecting it to come between $28.5 billion and $29.3 billion. The company also expects that the annual adjusted earnings per share to be between $2.90 and $3 a share.
Analysts have forecast revenue of $28.61 billion and earnings of $2.85 per share.
The company’s Chief Executive Officer Kevin Johnson said during a call with analysts that the sales of the company in the United States had come back to pre pandemic levels.
“When you look at the progress we’re making on vaccinations, certainly in the U.S., that’s a proxy for what’s going to happen around the world,” he said.
Over the past one year, the Covid-19 pandemic has forced consumers to stay back home and work and study from home which meant that they made their coffee and breakfast themselves which hit Starbucks and other restaurant chains particularly hard. The recovery of the segment has also been slowed down by recent lockdowns in parts of Asia and Europe.
During its latest completed quarter the sale of the company in its biggest growth market, China, had almost doubled year over year, even though in the same period a year ago the company’s stores in the market had been shut down because of the pandemic there, said the Seattle-based company.
However the company could not beat Wall Street expectations by the surge for its markets abroad. Revenues of the company grew by 35 per cent in its international markets but missed analysts’ expectations of growth of 48.25 per cent, according to IBES data from Refinitiv.
There was a 9 per cent growth in comparable sales in the Americas primarily because of a recovery in the United States which was in turn because of a vaccinated consumers returning to stores or ordering their daily cup of coffee online.
The company grew its active Rewards loyalty program members to 22.9 million, an 18% increase year over year.
“I believe we have an opportunity to double that number,” Johnson said. “I’m not going to give a time frame, it might take a couple of years.”
There was an 11 per cent growth in the revenues of the company to $6.67 billion for the second quarter ended March 28 which also missed the estimate of $6.82 billion.
“It is still going to be a while before people are both able to and comfortable with doing this again,” said Euromonitor International consultant Matthew Barry.
(Adapted from Investing.com)