Starbucks Corporation (NASDAQ: SBUX) shares slipped by 3% on Wednesday morning after the Company projected a weaker-than-expected forecast for its fiscal 2020 earnings.
For the year, Starbucks said it expects to report 2020 earnings per share below its “ongoing growth model of 10%,” according to an outlook provided by Starbucks Chief Financial Officer Pat Grismer at the 26th annual Goldman Sachs’ Global Retailing Conference.
However, for fiscal 2019, Starbucks expects to report a 16% growth in earnings per share compared to fiscal 2018. At the end of 2019, the Company expects to report earnings between USD 2.80 to USD 2.82 per share compared to USD 2.42 in 2018.
Grismer noted that a one-time tax benefit in 2019 will be a major headwind for the Company’s earnings growth in 2020. Additionally, he also said that Starbucks’ repurchase of approximately USD 2 Billion worth of shares in fiscal 2019 will also impact financials. The Company was expected to repurchase shares in fiscal 2020.
“But again, I want to reinforce that our growth-at-scale agenda is delivering against our expectations,” Grismer said. “I would say that we’re firing on all cylinders from an operating performance perspective with the focus and discipline necessary to drive growth at scale for a company like Starbucks and our long-term double-digit EPS growth model is fully intact.”
Starbucks highlighted in its slideshow that its main markets are currently the U.S. and China. In the previous quarter, Starbucks witnessed strong same-store growth in both market segments.
In the third quarter, Starbucks reported that its comparable sales grew by 6% globally, led by a 7% growth in the U.S. and a 6% growth in China. As a result, Starbucks experienced an 11% growth in net revenue during the quarter.
Starbucks Chief Executive Officer and President Kevin Johnson noted in the earnings release that the U.S. and China remain as the Company’s top priority markets. Johnson mentioned that the Company is aiming to achieve better customer experience, deliver new beverages, and accelerate its digital customer relationship.