Starbucks Conference Call Summary

Starbucks SBUX reported its third-quarter earnings on Thursday. Shares of the company are down more than two percent.

Below are some key takeaways from its conference call:

• Over 300,000 Starbucks partners are serving over 70 million customers from almost 21,000 stores in 65 countries every week.
• I'm particularly pleased to report that each of our reporting segments delivered solid performance in Q3 and contributed to our accelerated 11 percent increase in revenues to $4.2 billion.
• Particularly noteworthy is that our U.S. retail store business delivered comp growth of 7 percent.
• Globally, store comps grew 6 percent, our 18th consecutive quarter of comp store sales gains of 5 percent or more.
• As Starbucks enters its Q4, we are well on our way to meeting our growth targets for fiscal 2014
• Ideally positioned to continue delivering double-digit top and bottom line growth into the future.
• I could not be more proud of my Starbucks partners or of the exceptional execution and extraordinary results
• Innovation and share expansion also drove strong gains in our premium single-serve packaged coffee and tea portfolios.
• Overall, our operating performance in Q3 resulted in a 200 basis point expansion in our consolidated operating margin to a Q3 record of 18.5 percent.
• As Starbucks continues to deliver record revenues and profits, it's becoming increasingly clear to others what we have known all along, that Starbucks' most valuable asset is our store partners, our people.
• The culture of our company has been curated in our stores and is on display every day as partners connect with customers and one another.
• Digital platforms have been instrumental in building brand loyalty and extending and deepening customer engagement with Starbucks brand.
• The core strength of our loyalty program is fueling adoption of our mobile app.
• By integrating mobile loyalty, payment, and in-store digital experiences, we are creating game-changing technologies and experiences for our customers.
• Mobile order and pay will be the fastest and easiest way for customers to order, pay for, and pick up their purchases, once again demonstrating the lead position Starbucks has in all things mobile.

Financial Results:

• I'm particularly pleased with our consolidated comp store sales, which increased 6 percent and revenue growth of over 11 percent.
• Our consolidated operating income grew 25 percent to $769 million, a new third quarter record.
• This translates into 18.5 percent operating margin.
• Margin expansion for Channel Development continued in Q3. Revenue increased 13 percent and operating profit grew 45 percent to $139 million.
• Operating margin of 37 percent.
• Finally, Q3 operating cash flow was $850 million, up 28 percent from last year.

Guidance:

• We're now targeting fourth quarter non-GAAP EPS in the range of $0.73 to $0.75.
• This gives us growth of 22 percent to 25 percent over Q4 2013 calculated on a non-GAAP basis.
• It's very important to note that our Q3 EPS growth rate was 22 percent.
• On a GAAP basis, full-year fiscal 2014 EPS will be in the range of $2.70 to $2.72.
• Non-GAAP EPS will be in the range of $2.65 to $2.67.
• This gives us a very strong 21 percent to 22 percent growth over fiscal 2013.
• We now expect to open 1,550 net new stores globally, with the 50 additional stores from our prior target coming from the Americas.