What happened
Shares of Starbucks (SBUX 1.00%) jumped on Friday after the coffeehouse leader delivered solid fourth-quarter results and an encouraging growth forecast for the year ahead.
As of 3:25 p.m. ET, Starbucks' stock price was up more than 8%.
So what
Starbucks furthered its relentless global expansion. The coffee king opened 763 net new stores during the fourth quarter, bringing its total store count to over 35,700 locations worldwide.
Moreover, price increases helped to drive a 7% rise in Starbucks' global comparable-store sales. Strong growth in the restaurant chain's core U.S. market helped to offset COVID-related declines in China.
In all, Starbucks' adjusted revenue rose 11% to a record $8.4 billion. That was above Wall Street estimates, which had called for sales of $8.3 billion.
Still, higher labor costs and growth-related spending weighed on Starbucks' profitability. The company's operating margin declined by four percentage points year over year to 14.2%.
However, Starbucks' adjusted earnings per share of $0.81 were significantly better than analysts' expectations. The consensus estimate for per-share profits had been $0.72.
Now what
Management sees more growth ahead. Starbucks expects its U.S. comparable sales to grow by as much as 9% in 2023. It also anticipates that its sales in China will rebound as the country eases its COVID restrictions. Additionally, Starbucks intends to expand its global store count by roughly 7%, fueled by growth in its international markets.
All told, the company forecast its revenue to increase by 10% to 12% next year, despite an expected three-percentage-point hit from foreign exchange movements. Management believes this sales growth, coupled with anticipated margin expansion, will drive its earnings per share higher by 15% to 20% next year.
