Good annual results do not reconcile investors

Starbucks raises employee pay in the U.S.
Starbucks raises employee pay in the U.S.

High profit, increased unit count, significant improvement in comparable sales: Starbucks is recovering in almost all segments, according to its fiscal 2021 and fourth quarter report (both ended October 3, 2021). But sluggish business in China is still causing investor disgruntlement.

"Our strong finish to fiscal 2021, including record performance in the fourth quarter, demonstrates the resilience of Starbucks and reinforces the value of the bold strategic moves we have taken over the past two years. Through it all, we have thoughtfully navigated a strong recovery with an eye towards our future, all guided by our Mission and Values,” said Kevin Johnson, president and ceo.

In addition, Johnson announced an increased investment in employees, called "partners" at Starbucks, especially in the United States. For example, wages for retail employees are to rise to an average hourly wage of almost 17 US dollars by the summer of 2022, and for baristas they are then to be between 15 and 23 US dollars.

Fiscal 2021: Significantly more transactions again

Globally, Comparable Sales increased 20 percent throughout fiscal 2021, driven by higher average receipts (+10%) and more transactions (+9%).

In the North American market, this trend is reflected in a fairly analogous manner, while in the rest of the world, the number of transactions increased significantly more than average receipts. In the important Chinese market, on the other hand, the average receipt actually declined, but the number of transactions was also significantly higher.
Comparable Sales, Like-for-Like, etc.
Existing space sales, also known as same-store sales, comparable sales or like-for-like sales, are considered by experts to be the "hard currency" of the industry. Here, changes in the system sales of all locations that have been open for at least 13 months are considered. The reference figure is the same period of the previous year.

In total, Starbucks reported adjusted net revenues (sales, franchise fees and other revenues) of USD 29.1 billion, an increase of 24 percent compared to the previous year.

The number of units also increased to an all-time high. At the end of the fiscal year, Starbucks had 33,833 stores, a net increase of 538 stores. Of these, 51 percent are company-operated and 49 percent are licensed.

Nevertheless, the annual report went down badly with investors - the share reacted after trading hours with significant price losses. Because while Starbucks benefited almost around the globe from the recovery from the pandemic, a new Corona wave in China caused lockdowns there again. That led to a seven percent drop in comparable sales in the fourth quarter in Starbucks' biggest growth market.