Shares of coffee giant Starbucks (SBUX 0.47%) popped on Thursday morning after reporting financial results for its fiscal fourth quarter of 2023, which ended on Oct. 1. The year was a record year for the company's revenues, which was good reason for a caffeinated celebration. As of 10:30 a.m. ET, Starbucks stock was up 11%.
The U.S. loves its Starbucks
Starbucks finished its fiscal 2023 with record full-year net revenues of $36 billion, bolstered by record Q4 net revenues of $9.4 billion. The company did particularly well in North America, where its Q4 same-store sales grew by a healthy 8%.
North America is Starbucks' largest market, and strength in this geography is really good for the overall bottom line. In Q4, the company's net revenues in North America were up 12%, which was good. But it paled in comparison to its 40% year-over-year growth in operating income.
Starbucks wound up with over $1.6 billion in operating income in North America for Q4 alone. This was good for a 23% operating margin in this market, which was another big reason for the market to celebrate its financial results.
Watch China for now
While the U.S. is Starbucks' largest market, China is its second largest, and that's where it's opening the most new locations right now. It now has over 6,800 locations in China, which is 13% increase from this time last year. However, same-store sales were up only 5% year over year in Q4, and sales volume per location is still well below pre-pandemic levels.
Starbucks locations in China aren't as profitable as they could be if sales volume were higher. And this far removed from the start of the pandemic, it's fair to start wondering what's holding back a full recovery in that market. This is something for Starbucks' shareholders to monitor for now because it does have big implications for the company's future profits.
