Dutch Bros stock climbs on earnings as coffee chain dodges Starbucks' harsh selloff

By Bill Peters

New drinks with boba and protein milk help drive first-quarter sales

Starbucks Corp. may have been punished by the stock market last week after warning of a more cautious coffee drinker and stiffer competition - but on Tuesday, one of its smaller, more casual peers saw nothing of the sort from Wall Street.

Shares of Dutch Bros Inc. (BROS) jumped after hours on Tuesday after the chain - known for its cold, flavored coffees and energy drinks - raised its revenue outlook for the year, following a jump in sales and new drink launches. The upbeat forecast came despite what the company deemed a "continued volatile economic backdrop for the consumer."

Dutch Bros' stock jumped more than 8% after hours on Tuesday. However, the stock is still down around 12% over the past 12 months.

The company said it expects sales this year to come in at $1.2 billion to $1.215 billion; that forecast is up from earlier expectations for $1.19 billion to $1.205 billion. Dutch Bros' forecast for same-store sales percentage gains in the "low single digits" was unchanged.

For the first quarter, Dutch Bros reported net income of $16.2 million, or 8 cents a share, contrasting with a loss of $9.4 million, or 7 cents a share, in the same quarter last year. Adjusted for things like stock-based compensation, earnings per share came in at 9 cents.

Revenue jumped 39.5% year over year to $275.1 million, helped by dozens of new store openings. Same-store sales rose 10%.

Analysts polled by FactSet expected adjusted earnings per share of 1 cent, on revenue of $255.6 million.

"System same-shop sales growth featured a healthy combination of ticket expansion and traffic," Chief Executive Christine Barone said in a statement.

"Our traffic trajectory is particularly encouraging, and has now improved for two consecutive quarters," she continued. "We believe our success is due in part to the plans we began setting in motion last year, underscored by two strong new product launches in Q1."

The company this year has launched drinks like protein-milk-infused coffee and coffee with boba, the latter of which executives said would help draw more of the younger customers that have made the chain a popular stop for drinks.

Starbucks (SBUX) last week cut its outlook for the year after a quarter that missed the chain's own expectations. Chief Executive Laxman Narasimhan warned of a "deteriorating economic outlook" across several markets, and said foot traffic had fallen at U.S. restaurants. He said that in China, a slow economic rebound and lower-priced rivals had weighed on results.

Some Wall Street analysts hit Starbucks with downgrades after the results. Howard Schultz, Starbucks' former chief executive, subsequently said the company needed to have a "maniacal focus on the customer experience."

"The answer does not lie in data, but in the stores," Schultz said.

-Bill Peters

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05-07-24 1835ET

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