To The Moon

In the first half of Q3, Internet are mostly underperformed, even though the global recession and strong dollar headwinds, as the leader catering,$Starbucks(SBUX)$ has won this summer.

In the fourth quarter of fiscal year 2022 ending October 2, Starbucks' revenue and profit beat market consensus.

• Revenue was 8.41 billion US dollars, a year-on-year increase of 3.3%, slightly exceeding the market expectation of 8.32 billion US dollars;
• Overall same-store sales increased by 7% year-on-year, exceeding the market expectation of 4.1%; Among them, the growth rate of North America, which contributed the most, recovered to double-digit 11%, exceeding the market expectation of 7.6%, while the international region fell by 5% and the Chinese market fell by 16%;
• Earnings before interest and tax fell 20% year-on-year to $1.273 billion, but it was still higher than the consensus of $1.188 billion.

Source: Starbucks Financial Reports

First of all, in terms of profit margin, the market expectation is relatively low, because it can be seen that the profit margin of stores this year is under great pressure from the rising wages of employees, new training and the rising costs of supply chain, food and materials. Moreover, after Schultz took the helm again, he spent the money originally used for repurchase on improving Starbucks stores and investing in employees, which can be said to attach great importance to operations.

Schultz is really a lucky star of Starbucks. He founded and brought Starbucks up, and urged the development of the Chinese market, and achieved unprecedented success. After the epidemic, he once again took the helm as CEO. In these quarters, he successfully pulled back the store sales again.

We can see that the same-store sales in North America this quarter were +11%, among which the amount of single-ticket transactions increased by 10%, indicating that the company also transmitted the price influence to the downstream, and the high-price strategy was successful.

Orange: Globalwide, Yellow: America, Green: China , Data Source: Starbucks Financial Reports

Schultz will step down as CEO again in April next year. I wonder what kind of surprise the CEO of Durex's parent company, Lijie, will bring to Starbucks.

Secondly, the performance of China, although continuing to decline this quarter, is much better than the 44% decline in the previous quarter. The average transaction price has not continued to decline. Because the growth base in the same quarter last year was relatively high, on average, it also rebounded to some extent in the past two years. However, facing the competition of many domestic tea brands, Starbucks still lacks certain innovation ability.

Data Source: Starbucks Financial Reports

In the following winter, it has a slight advantage over coffee brands. I wonder if Starbucks can seize this opportunity and further restore the Chinese market.