What to expect from Starbucks' earnings report

Stephen Brashear/Getty ImagesStarbucks former COO Kevin Johnson, now CEO, introduces the Starbucks Rewards Prepaid Visa Debit Card during the Starbucks Annual Shareholders in 2016 in Seattle. Growth of My Starbucks Rewards will be on analysts’ mind as the company reports earnings Thursday afternoon.

  • Starbucks will report its earnings for the first quarter after the bell Thursday.
  • Analysts expect the coffee chain to report earnings of $US0.57 per share on revenues of $US6.204 billion.

Coffee giant Starbucks will report its first quarter earnings after markets close Thursday.

Wall Street analysts expect the company to report earnings of $US0.573 per share on revenue of $US6.204 billion.

As the 27,000+ store chain comes ever closer to reaching full-penetration in the United States, investors will be paying close attention to same-store sales growth at home, as well as new stores opened abroad in markets where Starbucks has plenty of room to grow, like China.

“We see several headwinds in the business: slowing rewards program growth, incremental competition at both the low and high end of coffee, aggressive new store growth (~750 net new stores opened in the US), throughput challenges, and negative mixshift to food vs. beverage,” UBS analyst Jason West said in a note to clients last week.

“We are concerned SBUX‘s same store sales could worsen until new store growth slows and in-store capacity constraints are addressed.”

The company has forecast long-term same-store sales growth of 3-5%.

Starbucks has also been testing new digital menu boards in some locations near its headquarters in Washington, a move that could be a harbinger of other future digital offerings designed to woo younger customers.

“A fair amount of quick-service concepts are further along in embracing this technology-and look-and-feel-than Starbucks,” Instinet analyst Mark Kallinowski said in a note to clients on Wednesday. “This may be because, as a coffeehouse concept, Starbucks may be concerned about whether or not digital menu boards ‘fit’ with the visual appeal of a coffeehouse concept.”

“However, there are technological advantages to digital menuboards, such as the visually striking ways in which menu offerings can be promoted. Over time, we would not be surprised to see a tech-forward company such as Starbucks go much further down this path.”

Wall Street analysts has a consensus price target of $US64 for the stock – 6% above where shares opened Thursday.

Starbucks’ stock has severely lagged behind the S&P 500 benchmark in the past year, rising just 3.6%.

This post will be updated when the company releases its earnings data…

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