EPS of 68c missed estimates of 80c. Revenue of $8.56B missed estimates of $9.13B. The quarter, and guidance, was not good. Starbucks slashed fiscal 2024 same-store sales, revenue and EPS guidance and lacks a cogent plan to boost demand. Several initiatives, including targeting overnight sales, dozens of new products and a four-week mobile-app upgrade cycle coul help, but also might just be a distraction unlikely to boost traffic. The chain will debut Mobile Order and Pay for All in 4Q to increase in-app discounting. This addresses consumer price-hike fatigue, but runs counter to the brand's premium positioning and may signal products aren't worth the price -- which could damage the brand. Revenue guidance was cut to low-single digits (from 7-10%), while US and global same-store sales outlooks were slashed to down low-single digits to flat (vs. 4-6%). Adjusted EPS growth was pared to flat to up low-single digits (from 15-20%). While none of this will be fatal to the company, it could be a long turnaround and we do not think buyers need to step in yet. We would prefer LULU or BKNG for a consumer disc. stock.
Authors of this answer, directors, partners and/or officers of 5i Research and/or affiliated companies have a financial or other interest in SBUX.