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Starbucks reported record quarterly sales, but higher costs affected profits.
Shares of the coffee giant rose 5% in after-hours trading.
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Sales rose 15 percent to a record $ 7.6 billion, in line with Wall Street estimates.
The Sirena logo hangs in front of the Starbucks Café. (AP Photo / Charles Krupa) / AP Newsroom)
Sales were affected by the strict restrictions on COVID-19 in China. Comparable sales in China fell 23%, overshadowing 12% growth in North America. Sales in the same store grew by 7% worldwide, exceeding forecasts.
TEMPORARY EXECUTIVE STARBUCKS SCHULTZ TERMINATES PURCHASE OF SHARES, REFOCUS OF CAPITAL IN EMPLOYEES, STORES
Starbucks has suspended guidance for the rest of its current fiscal year as uncertainty over the Chinese market makes it difficult to forecast profits.
Howard Schultz, interim CEO of Starbucks. REUTERS / David Ryder (REUTERS / David Ryder / Reuters Photos)
“I remain convinced that Starbucks’ business in China will eventually be larger than ours in the United States,” said CEO Howard Schultz in an interview with investors.
Schultz said Starbucks’ customer demand remains strong.
Ticker security Last change Change% SBUX STARBUCKS CORP. 74.33 -1.04 -1.38%
Net earnings rose just 2 percent to $ 674 million, and adjusted earnings of 59 cents a share fell short of analysts’ estimates of 60 cents.
STARBUCKS SAFELY INVESTMENT UNIONS 1 BILLION STAR IN WORKERS
Profits have been hit by higher labor costs, which are expected to rise further as the company tries to stem the growing trade union movement.
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Starbucks said on Tuesday it would spend $ 200 million this year on better pay and benefits, but stressed that union workers would not be eligible. Workers in more than 50 stores in the United States have voted in favor of unionization since late last year. The union organizers responded by filing a complaint with the National Labor Council.
The Associated Press contributed to this report.
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