Starbucks on Tuesday dropped its 2022 fiscal forecast on Tuesday because Covid’s blockade in China weighed heavily on international sales.
However, strong U.S. demand offset China’s sharp decline, contributing to the company’s quarterly earnings above Wall Street estimates.
Shares rose 5% in the report on extended trading.
Here’s what the company expects from Wall Street, based on a survey of analysts by Refinitiv:
- Earnings per share: 59 cents adjusted, meeting expectations
- Revenue: $ 7.64 billion vs. $ 7.6 billion was expected
The coffee giant reported second-quarter net income attributable to Starbucks for $ 674.5 million, or 58 cents per share, up from $ 659.4 million or 56 cents per share a year earlier.
Excluding items, Starbucks earned 59 cents per share, according to estimates by analysts surveyed by Refinitive.
A pedestrian carrying a Starbucks glass in San Francisco, California, USA on Thursday, April 28, 2022. Starbucks Corp.
David Paul Morris | Bloomberg | Getty Images
Net sales rose 14.5% to $ 7.64 billion, exceeding expectations of $ 7.6 billion. Global in-store sales grew 7% quarter-on-quarter, driven by strong growth in the United States.
Sales at the same store in the U.S. rose 12% as customers spent more on each order and visited more frequently. Active members of Starbucks’ loyalty program rose 17% to 26.7 million customers.
While the demand for its coffee in the U.S. remains strong, the company’s bartenders have unionized to earn better wages and working conditions. About 50 company-owned premises have voted in favor of unionization in the past six months. Since the return of interim Howard Schultz as interim CEO in early April, he has suspended stock trading and launched a listening campaign with baristas across the nation to stop the union’s growing push.
As the company seeks to limit the union’s momentum, Schultz announced a $ 1 trillion $ 2022 investment in prosecutions in salary hikes, improved training, and store renovations in fiscal 2022. However, the coffee giant will not benefit the coffee shop staff. he voted in favor of the union. Starbucks said that such changes in union stores should come through negotiations.
“The union contract will not come close to what Starbucks offers,” Schultz told analysts at a conference call for the company.
Outside the U.S., it was a rough quarter for Starbucks. International sales in the same store fell by 8% in China, the company’s second largest market, due to sharp declines. Sales at the same Chinese store fell 23% in the quarter as the country reinstated the blockades after Covid outbreaks. Executives said 72% of Chinese cities with cafes had outbreaks of the omicron variant during the quarter.
Approximately one-third of Starbucks stores in China are temporarily closed or only accept mobile orders and payment or delivery requests.
“It simply came to our notice then [third-quarter] the results are due to the time of the Shanghai blockade and further resurgence of the virus in other cities, including Beijing, “said Belinda Wong, president of China’s Starbucks.
Citing Chinese blockades, inflation and investments in its stores and staff, Starbucks broke its 2022 forecast. Over the past quarter, GAAP earnings per share are expected to decline by between 4% and 6% and adjusted earnings per share are expected to increase by 8% to 10% during the year.
Starbucks opened 313 new locations in the quarter.
The company also announced that it will move its investor day from December to September and move its location from New York City to Seattle.
Read the full earnings report here.
Starbucks (SBUX) Q2 earnings for 2022
Source link Starbucks (SBUX) Q2 earnings for 2022