In this segment of the Motley Fool Money podcast, host Chris Hill, Million Dollar Portfolio's Jason Moser, and Total Income's Ron Gross check in on the king of the coffee purveyors, Starbucks (NASDAQ: SBUX), which has reported its fiscal first-quarter results. And while they were sweet, they weren't quite the unicorn frappuccino that the markets had anticipated. The question is where the growth will be from here (hint: Asia) and whether this was a sign of bad things to come.
A full transcript follows the video.
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This video was recorded on Jan. 26, 2018.
Chris Hill: We begin with a hot, steaming mug of earnings. Starbucks' first quarter revenue came in at a record $6 billion. That was actually lower than Wall Street was expecting. That plus some tepid same-store sales numbers, shares of Starbucks down 5% on Friday, Jason.
Jason Moser: Yeah, these were Tall, not Venti, and I think the market is reacting appropriately.
Ron Gross: I'm going to let that go.
Moser: Let's be clear here, this was their first $6 billion quarter, so I think it's a little bit of an overreaction to say this is a business in decline. But I think the question we need to answer is, was this a quarter that didn't quite hit expectations? Or was this a quarter that portends tougher times to come? And I think that's a very fair question. When we talk about Starbucks and growth, it's really all about China and Asia-Pacific. That continues to be the case. 30% revenue growth in that region. And I think the Shanghai Roastery is really encouraging for a number of reasons. I think it's going to give them the opportunity to really groom that brand and communicate that brand on a global basis. But, very interesting statistic here, the average check of the Shanghai operation, first day it was open, $29 average check. Which is just really impressive to think about. Every person that went in there spent $29.
Hill: They're not going to keep that up, though.
Moser: No! That was the first day.
Gross: Pessimist.
Moser: But I think it gives you the sign of the potential there. And when they roll that out on a global basis -- Howard Schultz is, I think, in Milan right now looking to set up another one -- there's a big potential there, I think.