Starbucks Pledges $20 Billion in Dividends, Buybacks After Sales Miss

(Bloomberg) -- Starbucks Corp. reported quarterly sales that trailed estimates, showing looser pandemic measures aren’t bolstering results as much as investors expected. The company also announced $20 billion of new dividends and share buybacks over the next three years. 

• Same-store sales, a key measure, rose 17% globally in Starbucks’s fiscal fourth quarter, which ended Oct. 3. Analysts estimated a gain of 19%, according to Bloomberg. The coffee chain also missed estimates for overall revenue and U.S. same-store sales.
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Key Insights

• It’s clear Starbucks is bouncing back from the pandemic, but investors may question if it’s fast enough. The new round of share buybacks may help to ease some concerns, but analysts will be listening closely for guidance on the company’s current fiscal year, which Starbucks said will come on its call with analysts later Thursday.
• Comparable-store sales in China fell 7% -- better than the average estimate for a 7.5% decline from analysts. Renewed pandemic measures have curbed economic activity in the world’s most-populous nation, an important market for Starbucks along with the U.S. Like last quarter, the company also cited the adverse impact from value-added tax exemptions a year earlier in China that hurt comparisons.
• In North America, which includes locations operated by the company in the U.S. and Canada, Starbucks said that the number of transactions jumped 18% on a comparable basis. The average sale was only 3% higher, however. Restaurants are under increasing pressure to pass on higher costs to diners as wages rise along with materials and shipping. Starbucks made reference to “increased supply-chain costs and inflationary pressures” in its statement.

Market Reaction

• The shares alternated between gains and losses in late trading in New York Thursday.

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