Starbucks suspends its outlook as Covid lockdowns hammer sales in China

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A pedestrian carries a Starbucks branded cup in San Francisco, California, U.S., on Thursday, April 28, 2022. Starbucks Corp.
David Paul Morris | Bloomberg | Getty Images

Starbucks on Tuesday reported quarterly revenue that topped analysts’ expectations as U.S. sales growth offset sharp declines in China.

Shares rose less than 1% on the report in extended trading.

Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:

  • Earnings per share: 59 cents adjusted, meeting expectations
  • Revenue: $7.64 billion vs. $7.6 billion expected

The coffee giant reported fiscal second-quarter net income attributable to Starbucks of $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, in line with estimates from analysts surveyed by Refinitiv.

Net sales rose 14.5% to $7.64 billion, topping expectations of $7.6 billion.Global same-store sales increased 7% in the quarter, fueled by strong growth in the United States.

U.S. same-store sales climbed 12%, as customers spent more per order and visited more often. Active membership of Starbucks’ loyalty program jumped 17% to 26.7 million customers.

Outside the U.S., it was a grim quarter for Starbucks. International same-store sales shrank 8%, dragged down by sharp declines in China, the company’s second-largest market. Chinese same-store sales sank 23% in the quarter as the country reimposed lockdowns after Covid outbreaks.

The company also said in the earnings release that it would announce investments in its employees, stores and brand and share its fiscal 2022 financial targets during the conference call with analysts. Last quarter, it said it expects GAAP earnings per share to fall by a range of 4% to 6% and adjusted earnings per share to rise by 8% to 10% during the fiscal year.

Starbucks opened 313 net new locations in the quarter.

Read the full earnings report here.

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