From April through June, Starbucks reported record sales as strong U.S. demand offset COVID shutdowns in China.
Starbucks on Tuesday announced record earnings for April through June, compensating for COVID shutdowns in China with strong U.S. demand.
Despite continuous store closures and shortened hours in China because of coronavirus precautions, the Seattle-based coffee giant outperformed sales projections. In its third fiscal quarter, Starbucks reported a 44% decline in same-store sales in China, the company's second-largest market after the United States. As of the end of the third quarter, Starbucks reported operating COVID-restricted outlets in about 2,000 locations across 50 cities.
However, robust U.S. demand made up for it. In the United States, same-store sales, or sales at establishments operational for at least a year, increased 9% as consumers increased their spending on individualized cold drinks and food, such as lime-frosted coconut bars. The volume of morning traffic increased as more individuals headed back to their workplaces.
Although we are aware of the effects that inflation and economic uncertainty are having on consumers, you all must understand that we are not currently observing any measurable decrease in customer spending or any evidence of customers trading down "Schultz stated during an investor conference call on Tuesday.
According to Schultz, cold drinks, which now account for 74% of beverage sales in the United States, have given Starbucks a significant competitive advantage and are attracting younger customers.
"The possibility for premium, personalized cold coffee is simply immense, "I quote Schultz.
Starbucks' quarterly record revenue of $8.2 billion increased by 9%. The $8.1 billion expectation from Wall Street was surpassed, according to analysts surveyed by FactSet.
Sales are being helped by new outlets, many of which are more geared toward drive-thru and curbside service. The business claimed that since June 2021, it has launched 1,355 new stores in foreign markets and 298 net new stores in its North American region.
Starbucks reported a 21% decline in net income to $912.9 million due to higher labor, staff training, and supply chain costs. To increase the salaries of American workers, the corporation announced a $1 billion investment in employee wages and benefits last October. According to John Culver, president of Starbucks North America, the average hourly wage for Americans is currently $17. Additionally, training time has increased.
I have promised to stay as long as is required to make sure the next CEO has a smooth transition before moving to the board, he said.
When special items were taken into account, Starbucks made 84 cents per share. That was more than the 77-cent profit expected by Wall Street.
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