Starbucks announces record sales, suspends guidance on China’s COVID-19 restrictions


Starbucks Record quarterly sales were posted, but higher costs weighed on profits.

The coffee giant’s shares were up 5% in after-hours trading.

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Sales jumped 15% to a record $7.6 billion, matching Wall Street estimates.

Starbucks

The “Siren” logo hangs outside a Starbucks coffee shop. ((AP Photo / Charles Krupa) / AP Newsroom)

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.

Interim Starbucks CEO Schultz suspends share buybacks and cancels capital in employees and stores

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.

Howard Schultz, interim CEO of Starbucks. Photograph: David Ryder/Reuters (Reuters/David Ryder/Reuters Photo)

“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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SBUX Starbucks Corporation. 74.33 -1.04 -1.38%

Net profit rose just 2% to $674 million, and adjusted earnings of 59 cents per share were less than analysts’ expectations of 60 cents.

Starbucks faces unions investing $1 billion in workers

The profit was affected by higher labor costs, which are expected to rise further as the company tries to avoid the increased union movement.

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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.

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