Performance exceeded market expectations, and Starbucks surged nearly 10%.
Before the opening of the US stock market on November 2nd, Starbucks (NASDAQ: SBUX) released its fourth quarter and full year financial reports for the fiscal year ended October 1, 2023. The financial report shows that in the fourth quarter, Starbucks' comprehensive net income reached a historic high of 9.374 billion US dollars, a year-on-year increase of 11.4%, higher than the market's expected 9.29 billion US dollars; The net profit was 1.219 billion US dollars, a year-on-year increase of 38.8%. Non GAAP earnings per share were $1.06, a year-on-year increase of 31%, higher than market expectations.
The higher than expected performance led to a 10% increase in Starbucks' stock price after the US stock market opened. As of the close on November 2nd, Starbucks rose 9.48% to close at $100.01.
From a segmented market perspective, as Starbucks' headquarters, the North American region achieved a total revenue of $6.9 billion in the fourth quarter (including $6.425 billion in revenue in the United States), an increase of 12.5% year-on-year. It is worth mentioning that in the fourth quarter, the average unit price of customers and same store transaction volume in North America achieved double growth, increasing by 6% and 2% respectively. Driven by this, same-store sales in North America surged by 8%. Starbucks explained that the main reason for the sales boom was the arrival of pumpkin flavored lattes and apple croissants on the autumn menu.
The performance of the Chinese market is also worth paying attention to. Starbucks CEO Laxman Narasimhan expressed satisfaction with the performance of the Chinese market this quarter.
Specifically, the Chinese market revenue in the fourth quarter was 841 million US dollars, an increase of 8% year-on-year, and a year-on-year increase of 15% after excluding the impact of exchange rate fluctuations. In the fourth quarter, the Chinese market saw a net increase of 326 stores, reaching a new historical high. The increase in the number of stores has also driven the growth of active members of Star Club. At the end of the fourth quarter, the number of active members of China Star Club (who have consumed in the past 90 days) exceeded 21 million, reaching a historic high, with a year-on-year increase of 22%. In addition, the omnichannel business in China continues to have a strong momentum, with fast growth in stores, coffee fast (online point, store to store pickup), specialized star delivery (outbound delivery), e-commerce, and other channels.
Throughout the fiscal year, the revenue in the Chinese market was $3 billion, a year-on-year increase of 3%, an increase of 11% after excluding the impact of exchange rate fluctuations, and a 2% increase in same store sales. By the end of the fiscal year, the number of Starbucks' stores in China had increased by 13% year-on-year, reaching 6806. Nashan said, "In China, our revenue continues to grow month on month every quarter, with a 20% increase in revenue in the second half compared to the first half, demonstrating our strong growth momentum." In the financial report call, he reiterated Starbucks' plan to open stores in China and stated that by 2025, we aim to achieve our vision of 9000 stores, which is to open 1000 new stores annually.
In the past year, we have continued our growth momentum in the Chinese market, which has made us optimistic about our market position and confident in the unique competitive advantage of our business. In Nashan's view, Starbucks' advantages in the Chinese market include excellent partners including the Chinese leadership team, unique stores, vertically integrated and highly digitized efficient operations, and Starbucks' highly relevant innovation in the local area. The number of coffee drinkers in the Chinese market continues to grow, and Starbucks will steadily maintain its leading position in the high-end market, continuously develop store types, and enter more new cities.
Looking ahead to the 2024 fiscal year, Starbucks has lowered its previous global growth target of 7% to 9%, with an expected growth rate of 5% to 7% for global same store sales in the 2024 fiscal year. Among them, North America is expected to increase by 5% to 7%, and the same store sales in the Chinese market will increase by 4% to 6% from the second quarter to the fourth quarter. The global growth rate of new stores will remain at 7%, with a growth rate of 4% in North America and 13% in China. The revenue growth guidance is at the lower end of 10% -12%, while the EPS growth guidance remains at 15% -20%.