The world’s most famous coffee brewer has felt the effects of the pandemic, but what can investors expect from Starbucks’ earnings?
Even well-established brands like Starbucks (NASDAQ: SBUX) faced tough challenges during the pandemic. At the height of the health emergency, the coffee chain had to close its doors to coffee addicts as it leaned on its drive-through and takeaway services to boost sales. As governments administer vaccines, the economy has started to reopen, which has given shareholders hope that Starbucks will soon return to business as usual.
Starbucks investors are hoping to see a continuation of reopening momentum in its earnings report on Tuesday. However, concerns around the new Delta variant are worrying especially for food and beverage businesses that rely heavily on people being out and about picking up snacks and coffees.
Let’s see how the coffee giant is expected to perform in its second-quarter earnings report.
When is Starbucks’ earnings date?
Starbucks reports earnings for the second quarter of 2021 on Tuesday, July 27 at 5:00 PM Eastern Time.
How can I listen to Starbucks’ earnings call?
To listen to the call and to access the transcript, as well as the shareholder’s letter and the financial statements for the quarter, all you need to do is go to Starbucks’ investor relations page.
What to expect from Starbucks earnings
Wall Street expects adjusted earnings of $0.76 per share, representing an increase from the loss of $0.460 per share it posted year-over-year (YoY). Analysts are also predicting sales for Q2 to come in at around $7.27 billion, a 72% jump YoY.
For the full year, the coffee expert is expected to report sales of $28.82 billion. As Starbucks historically brings in more revenue in the final quarter of the year due to high sales of their holiday-inspired drinks, if the company meets this target for Q2, it will likely reach its yearly target too.
Investors should be prepared for management to potentially change this yearly estimate as previously mentioned, the new COVID-19 strain is threatening reopens. Therefore, we can expect questions asking the company to confirm if it is still on target to reach this figure.
While shares are up 22% year-to-date, investors don’t seem to be expecting any negative outcomes from the earnings release which means there could be a severe sell-off if Starbucks misses estimates.
It’s important to note though that Starbucks has 62% of its locations in the U.S. and China which also have the highest vaccination rates in the world. With the number of people in the U.S. being jabbed rising, so too did Starbucks sales in Q1 which outpassed pre-pandemic levels. In addition, sales in China were 90% recovered in the previous quarter.
These figures suggest that the Delta variant isn’t as big of a threat to its business as many thought. Shareholders will like to see another earnings beat today to ensure vaccination numbers boosted sales again in Q2.
A return to offices and university campuses should also drive sales this September, bringing hope for higher revenues for the current quarter too.
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