Starbucks revenue misses after China's Covid resurgence hurts sales
- Starbucks topped analysts' estimates for its fiscal fourth-quarter earnings, but the coffee chain fell short on revenue.
- China saw same-store sales shrink by 7% in the quarter, missing Starbucks' prior forecast of flat same-store sales growth.
- U.S. same-store sales increased by 22% in the quarter, rising by 11% on a two-year basis.
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Starbucks on Thursday reported quarterly revenue that fell short of expectations as Covid-19 resurgences in China weakened sales.
Shares of the company fell more than 1% in extended trading.
Here's what the company reported for the quarter ended Oct. 3 compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:
- Earnings per share: $1 adjusted vs. 99 cents expected
- Revenue: $8.1 billion vs. $8.21 billion expected
Starbucks reported fiscal four-quarter net income of $1.76 billion, or $1.49 per share, up from $392.6 million, or 33 cents per share, a year earlier.
Excluding the gains from the sale of its South Korean joint venture and the 53rd week of the quarter, the coffee giant earned $1 per share, topping the 99 cents per share expected by analysts surveyed by Refinitiv.
Net sales rose 31% to $8.1 billion, falling short of expectations of $8.21 billion. Global same-store sales climbed 17%, missing StreetAccount estimates of 18.3%.
U.S. same-store sales increased by 22% in the quarter, and rose 11% on a two-year basis. Customers spent 3% more on transactions on average. The company's loyalty program reported 24.8 million active members, up 28% from a year earlier.
McDonald's, Domino's Pizza and Chipotle Mexican Grill are among the restaurant chains that said staffing challenges dented their latest quarter's U.S. results. On Wednesday, Starbucks announced it will hike its employees' wages at least twice in 2022, bringing the pay floor to $15 an hour faster than previously shared.
Growth in Starbucks' international markets was muted. International same-store sales grew by 3%. In China, the company's second-largest market, same-store sales shrank by 7%. Starbucks previously predicted flat Chinese same-store sales growth for the quarter.
The company added 538 net new locations during the quarter. Starbucks has been updating its store footprint, closing some cafes and opening new ones that are better designed for mobile and to-go orders.
Read the full earnings release here.
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