Starbucks Takes Hit In The Middle East And China As Coffee Giant Revises 2024 Sales View

Starbucks reported worse-than-predicted fiscal first-quarter earnings and revenue, and issued tempered 2024 guidance, revising lower its business expectations for China. The Seattle-based coffee giant reported Q1 earnings grew 20% to 90 cents per share, while revenue increased 8% to $9.43 billion. Analysts had predicted EPS of 93 cents and sales totaling $9.59 billion. Starbucks stock advanced before falling more than 1% to 93.03 during market action. CEO Laxman Narasimhan told investors on the earnings call that the company has run into difficulties in China and the Middle East, with the Israel-Hamas war negatively impacting its business. Starbucks experienced a slower-than-expected recovery in China, driven by a more cautious consumer.

On the earnings call, Starbucks executives outlined their 2024 forecast, maintaining its 15%-20% EPS growth target. However, they now project 2024 revenue growth in the range of 7%-10%, down from its previous range of 10%-12%. Starbucks is also predicting full-year global and U.S. comparable sales growth in the range of 4%-6%, both revised from the previous range of 5%-7%. In China, Starbucks expects comparable sales growth in the low single-digits for 2024.

Starbucks stock has a 56 Composite Rating out of 99 and a 22 Relative Strength Rating, an exclusive IBD Stock Checkup gauge for share-price movement. The EPS Rating for Starbucks stock is 89.

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