Starbucks shares rose in pre-market trading Wednesday even as the coffee chain cut its fiscal 2024 full-year sales outlook amid challenges arising from political boycotts and slowing international sales.
Starbucks CEO Laxman Narasimhan told analysts on the earnings call that the Chinese market faces increasing competition from lower-priced rivals.
The Starbuck’s share price continues to oscillate within a descending channel, with the pattern’s upper and lower trendlines marking key support and resistance areas.
Starbucks Corporation
Source: TradingView.com.
Shares in Starbucks (
SBUX
) were up more than 5% in pre-market trading Wednesday even as the Seattle-based coffee chain missed Wall Street’s
top and bottom line
quarterly expectations and trimmed its fiscal full-year sales forecast due to challenges arising from political boycotts and slowing international sales.
Investors may have braced for a steeper decline in sales after the company cautioned about slowing store traffic during the holiday season. “Results were better than feared following the stock’s recent selloff; it sounds like there is a clear plan despite top-line headwinds,” Joshua Long, a Stephens analyst told
Reuters
.
Starbucks reported a fiscal first quarter adjusted profit of 90 cents a share on net sales of $9.43 billion, while analysts had forecast
earnings per share (EPS)
at 93 cents on sales of $9.59 billion. The coffee chain’s North American comparable store sales rose 5% in the period, only slightly below estimates. However, international
comparable store sales growth
of 7% were considerably short of the 13.2% Street forecast due to the Israel-Hamas conflict slowing sales in the Middle East. The company’s business in China—its second largest market—reported same-store sales growth of 10%, building on a 5% increase in the prior quarter. Nonetheless, CEO Laxman Narasimhan told analysts on the earnings call that the Chinese market continues to face increasing competition from lower-priced rivals.
Looking ahead, the company trimmed its full-year fiscal 2024 revenue guidance to between 7% and 10%, down from its prior forecast of 10% to 12%. It also downwardly revised its global comparable-store sales outlook to between 4% and 6% from its earlier projection of 5% to 7%.
SBUX shares have oscillated within a
descending channel
since early May, establishing clear
support and resistance
areas on the chart. After a significant decline from the pattern’s top trendline over the past two months, the price has stabilized just below the
50-day moving average
. Importantly, trading volume had increased leading into the company’s earnings report, raising the likelihood of heightened volatility. Keep an eye on how the price responds to the channel’s two
trendlines
for clues on the stock’s next move.
Starbucks shares were up 5.4% at $99.15 about half an hour before the opening bell.
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