American Coffee Beans and Starbucks in Fiscal 2022

Starbucks reported fourth-quarter revenue of $8.4 billion for fiscal 2022, with global same-store sales up 7 percent, above market expectations, and full-year net revenue up 11 percent to $32.3 billion. North American same-store sales rose 11 percent, while international same-store sales fell 5 percent and China same-store sales dropped 16 percent, though the China figure improved sequentially.

Interim CEO Howard Schultz said the reinvention plan is showing early results and expressed confidence in the long-term China business. The US loyalty program launched in September and demand for cold, customized drinks both supported the quarter. The reinvention plan is expected to shape partner, customer and store experience, with the company targeting profitable growth from 2023 onward.

Starbucks announced its fourth quarter and full-year results for fiscal year 2022 on Thursday, US local time. The data showed that fourth-quarter revenue reached $8.4 billion, with global same-store sales up 7%, exceeding market expectations; full-year net revenue grew 11% year-over-year to $32.3 billion. North American same-store sales rose 11%, while international same-store sales fell 5%, and China same-store sales dropped 16%, though there was significant sequential improvement. Interim CEO Howard Schultz said the company's reinvention plan is showing initial results, and he remains confident in the long-term potential of the China business. In addition, Starbucks' loyalty program and the customization trend in cold beverages became highlights of the results. For more coffee news, please follow Coffee Workshop and Front Street Coffee.

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On Thursday, US local time, Starbucks released its fourth quarter and full-year performance report for fiscal year 2022. The report showed that Starbucks' fourth-quarter revenue was $8.4 billion, with global same-store sales up 7%, a performance that exceeded market expectations. Full-year net revenue grew 11% year-over-year to $32.3 billion.

Starbucks noted that the growth was mainly driven by an 11% increase in North American same-store sales, while international same-store sales fell 5%, with China same-store sales down 16%.

Interim CEO Howard Schultz said that demand for Starbucks coffee accelerated in both the fourth quarter and the full year, proving that the reinvention plan launched earlier by the company has successfully taken its first step. The reinvention plan will cover and enhance every aspect of Starbucks partners, customers, and store experience, and is expected to drive accelerated, sustainable, long-term, profitable growth and value creation for the company starting in 2023.

In addition to the reinvention plan, the customer loyalty program launched in the United States in September this year also helped fourth-quarter earnings. The program encourages members and company partners to earn and purchase digital collectible stamps in the form of NFTs, thereby unlocking exclusive experiences and rewards. In the fourth quarter, the number of active members in the loyalty program increased by 16% to 28.7 million.

CNBC analysis suggested that the reason for Starbucks' 11% sales growth in the North American market was an increase in average consumer spending and a slight rise in foot traffic, with beverage prices also up 6% compared with 2021.

In response, Starbucks said that cold beverage station drinks currently account for more than 75% of beverage sales, a performance mainly driven by Gen Z consumers, because young consumers like to customize drinks and share photos on social media.

As a result, customers are more inclined to add expensive syrups to cold drinks, use dairy alternatives, and prefer cold brew products, among other practices, which have pushed up drink prices. Of course, customers are also buying hot coffee drinks. According to Sara Trilling, president of Starbucks North America, sales of the Pumpkin Spice Latte increased by 70% compared with the same period last year.

In the China market, government Covid-19 restrictions continued to put pressure on Starbucks' international performance. According to StreetAccount data, the company's international same-store sales fell 5%, a smaller decline than the expected 7.1%.

Same-store sales in China, Starbucks' second-largest market, fell 16% this quarter, but compared with revenue in the third quarter of this year, sales revenue in the China market achieved sequential quarterly improvement.

Starbucks China's net revenue in the fourth quarter significantly narrowed by 29 percentage points from a 38% decline in the third quarter to a 9% decline this quarter. Same-store transaction volume also recovered from a 43% decline in the third quarter to a 17% decline in the fourth quarter, while average same-store ticket size increased 1%.

Over the past few weeks, the domestic pandemic situation has worsened again, so Howard expects the uncertain state caused by repeated outbreaks to continue, but he also reaffirmed long-term confidence in the China business.

Howard said the signs of recovery in the China market in the fourth quarter made the company very encouraged. Whether it was innovation, stronger online and offline connections between customers and the brand, or improvements in pandemic restrictions, all were reasons for the positive momentum in sales and the continuous quarter-over-quarter improvement.

Starbucks' CFO forecast Starbucks' performance for fiscal year 2023, with revenue expected to grow 10%-12%. US same-store sales are expected to grow 7%-9%. As for the China market, considering the performance in fiscal year 2022 and the impact of restrictions, Starbucks China's sales revenue in the first quarter of 2023 will still be in an unsatisfactory state, but a larger increase will follow afterward.

Image source: Internet

The above content is compiled by CoffeeHunters, a coffee news website.