Starbucks on Tuesday halted its outlook for fiscal 2022 as Covid’s blockade in China weighed heavily on international sales.
Still, strong US demand offset China’s sharp decline, helping the company’s quarterly revenue outpace Wall Street estimates.
Shares rose 5% on the expanded trading report.
Here’s what the company said compared to what Wall Street expected, based on a survey of analysts at Refinitiv:
- Earnings per share: 59 cents adjusted, meeting expectations
- Revenue: $ 7.64 billion versus the expected $ 7.6 billion
The coffee giant reported a net profit for the second fiscal quarter due to Starbucks of $ 674.5 million, or 58 cents a share, compared to $ 659.4 million, or 56 cents a share, a year earlier.
Excluding items, Starbucks earned 59 cents a share, according to analysts polled by Refinitiv.
A pedestrian wears a Starbucks brand in San Francisco, California, USA, on Thursday, April 28, 2022. Starbucks Corp.
David Paul Morris Bloomberg | Getty Images
Net sales rose 14.5 percent to $ 7.64 billion, beating expectations of $ 7.6 billion. Global sales in the same store increased 7% during the quarter, fueled by strong growth in the United States.
Sales at the same store in the United States rose 12 percent as customers spent more on orders and visited more often. Active membership in Starbucks’ loyalty program jumped 17% to 26.7 million customers.
While demand for his coffee remains strong in the United States, the company’s baristas are uniting in hopes of getting better pay and working conditions. In the last six months, about 50 company-owned companies have voted in favor of the merger. Since Howard Schultz returned as interim chief executive in early April, he has stopped buying shares and launched a hearing campaign with baristas across the country to curb growing pressure from unions.
As the company seeks to curb union pressure, Schultz has announced a $ 1 billion investment in fiscal 2022 to raise wages, improve training and innovation in stores in fiscal 2022. However, the coffee giant will not offer improved benefits to workers in cafes that have voted for unionization. Such changes in union stores will have to come through bargaining, Starbucks said.
“The union agreement will not even come close to what Starbucks offers,” Schultz told analysts during the company’s conference call.
Outside the United States, it was a grim neighborhood for Starbucks. International sales in the same store shrank by 8%, driven by a sharp decline in China, the company’s second-largest market. Sales at the same store in China fell 23% during the quarter as the country imposed a blockade again after the Covid outbreak. Executives said 72% of Chinese cities with cafes had outbreaks of omicron during the quarter.
Approximately one-third of Starbucks stores in China are temporarily closed or only accept mobile orders and payment or delivery orders.
“We expect even more impact on ours [third-quarter] results due to the time of the blockade in Shanghai and the further resurgence of the virus in other cities, including Beijing, “said Belinda Wong, chairman of Starbucks China.
Citing China’s blockade, inflation and investment in its stores and employees, Starbucks suspended its forecast for fiscal 2022. In the last quarter, it said it expects GAAP earnings per share to fall between 4% and 6%. adjusted earnings per share to increase by 8% to 10% in the fiscal year.
Starbucks opened 313 net new seats in the quarter.
The company also announced it was moving its investor day from December to September and moving its location from New York to Seattle.
Read the full revenue statement here.