Starbucks Record quarterly sales were posted, but higher costs weighed on profits.
The coffee giant’s shares were up 5% in after-hours trading.
Sales jumped 15% to a record $7.6 billion, matching Wall Street estimates.
Sales have been affected by China’s strict COVID-19 restrictions. Similar sales in China fell 23%, which outweighed the 12% growth in North America. Same-store sales are up 7% globally, beating estimates.
Starbucks has suspended guidance for the remainder of its current fiscal year as the uncertainty surrounding its market in China makes earnings difficult to predict.
“I remain convinced that ultimately Starbucks’ business in China will be larger than our business in the United States,” CEO Howard Schultz said on a call with investors.
Schultz said customer demand for Starbucks remains strong.
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Net profit rose just 2% to $674 million, and adjusted earnings of 59 cents per share were less than analysts’ expectations of 60 cents.
The profit was affected by higher labor costs, which are expected to rise further as the company tries to avoid the increased union movement.
Starbucks said Tuesday it would spend $200 million this year on better pay and benefits, but stressed that workers in union stores would not be eligible. Workers in more than 50 US stores have voted to join unions since late last year. Union organizers responded by filing a complaint with the National Labor Relations Board.
The Associated Press contributed to this report.